Monday Morning Livestock Market Update - Weekend Events May Influence Markets

GENERAL COMMENTS:

The rally in the cattle complex during the second half of last week was generally technical in nature. Lower cash was not supportive to the rally. Boxed beef provided some support but not enough to indicate consumer demand is alive and well. The weekly export sales report did not provide much support as sales were 11% below the previous week. Both domestic demand and international demand will need to increase to work through the heavier supplies of beef that will be coming to the market in the near term. Projections are for cash to be either steady or slightly lower again this week. Packers have not been aggressive and may not have the need to step up this week either. Feeder cattle found support from lower corn prices along with increased demand from buyers in the country. There is optimism that tighter supplies will translate into higher cattle prices later in the year.

Hogs could not finish the week on a positive note except for the June futures. June hogs are nearing contact expiration and may not move very much unless there is a large movement of cash. Deferred contracts could not hold with the decline of $2.64 for cutouts. Cutouts will need to resume strength or futures may not be able to hold the uptrend. The National Direct Afternoon report was down $3.13 as packers did not need to be aggressive. Weekly export sales on Friday were 13% below the previous week, but still good at 31,900 metric tons (mt). China was again listed as a buyer with the second largest purchase.

	BULL SIDE		BEAR SIDE
1)	The sharp reversal from the lows at midweek sets the tone for further technical buying. The market may have been overdone to the downside.	1)	The bombing on a grain facility in Ukraine over the weekend puts exporting of grain in jeopardy. There is expectation Russia may target more facilities. Corn prices are rebounding on the event.
2)	Lower cattle weights mean feedlots may be current at the present time. Packers will need to purchase more animals to obtain the required tonnage to meet demand.	2)	There is anticipation packers may not be aggressive again this week with the expectation of lower cash.
3)	Pork cutouts have been trending higher, providing support to the market. This is expected to continue as summer demand should keep retail orders strong.	3)	Cash hog prices are too variable, leaving traders cautious over upside price potential. Hog supplies are tightening but packers have been able to obtain what they need by paying higher prices only a few days out of the week.
4)	China was again listed as a buyer on the weekly export sales report. This is the fourth consecutive week they have been one of the top four buyers.	4)	Hog weights are above a year ago and the five-year average for this time of year. Tightening hog numbers may not mean much if hogs are not current and packers are able to obtain sufficient supply without being aggressive.