Thursday Morning Livestock Market Update - Weakness May Carry Over

GENERAL COMMENTS:

Live cattle tried to extend gains with a higher opening Tuesday, but that ran out of steam, falling back throughout the day. Feeder cattle followed a similar pattern, except for May posting triple-digit gains. Traders did not have anything to go on as cash was quiet with no indication of bids or offers. The upcoming Memorial Day weekend may keep packers from being aggressive and they will not want to pay higher money for cattle. They may not need cattle as usual due to the holiday. They also have some already purchased ahead, which may leave them with the upper hand. Boxed beef prices closed lower with choice down $3.16 and select down $2.15, which does not help the situation.

Hogs cannot find any traction, continuing to make new contract lows. Stronger cash Tuesday was offset by weakness of cutouts. The National Direct Afternoon Hog report showed cash up $0.59, which was impressive given the large decline Monday. Cutouts showed weakness with values down $1.27. The uncertainty surrounding the market keeps bearish traders in control. Fundamentals are providing no solid support, leaving lower as the path of least resistance. The market is oversold, but that is not enough cause for traders to cover short positions.

	BULL SIDE		BEAR SIDE
1)	Cattle numbers continue to tighten, which should continue to provide support to the market.	1)	Demand may be showing some sign of slowing as boxed beef took a hit Tuesday. Consumers may have reached a threshold.
2)	So far, demand has not been impacted to any significant degree due to higher retail prices. Consumers prefer beef.	2)	Traders may be anticipating a decrease in cash cattle this week and are not waiting to see the actual results.
3)	Hog futures might see some short-covering into the three-day weekend as the market is oversold.	3)	Continued new contract lows in hogs keep traders from being aggressive buyers and funds continued sellers.
4)	June hog futures are becoming closely in line with the index, which should limit further downside as most of the premium has been taken out of the market.	4)	Lower prices have not stimulated demand sufficiently to consistently support pork cutouts.