Friday Morning Livestock Market Update - Feeders Might See Further Pressure

GENERAL COMMENTS:

Some light cash trade took place with dressed cattle averaging $295 to $296 in Nebraska and Iowa, down $4.00 to $5.00 from last week. Live cattle have not yet traded. This likely set the trend for the week with active trade to take place Friday as business needs to be done ahead of the weekend. Lower cash will keep a lid on the potential for live cattle futures. Feeder cattle may see further pressure Friday as weather forecasts are pushing corn prices higher. Further liquidation may take place ahead of the three-day weekend. Boxed beef was higher in both categories with choice up $3.01 and select up $0.32. Export sales were neutral at 12,800 metric tons (mt), nearly the same as the previous week, leaving the market focusing on cash and outside market movements.

Hogs spent much of the day in positive territory before succumbing to some selling pressure later in the day, pulling futures back to close mixed. Some spread trading took place between July and later months. The National Direct Afternoon Hog report showed cash down $0.94 as packers seemed to have finished their aggressive buying for the week. Cash may be lower Friday as most of the buying has been finished. Cutouts were $1.16 higher Thursday, which may provide some support to futures Friday. Weekly export sales were slightly better than the previous week at 26,700 mt. Futures may trade mixed Friday ahead of the three-day weekend. Monday is the U.S. federal Juneteenth holiday and markets are closed until Monday evening. Saturday slaughter is estimated at 21,000 head.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures have lower cash already factored in which could leave futures supported at current levels.	1)	Cash cattle trading lower was not expected as traders were leaning toward no worse than steady cash. This could put further pressure on the market.
2)	Feeder cattle left a chart gap on the open yesterday and something that technical traders will want to close at some point.	2)	Higher grain prices overnight may put further pressure on feeder cattle as more concern over crop development surfaces.
3)	Higher pork cutouts should provide additional support to hog futures Friday.	3)	Hog futures have had a strong price increase since Memorial Day, which could trigger some profit-taking into the extended weekend.
4)	Funds have been short-covering and may not turn to be aggressive sellers of hog futures again anytime soon. Market fundamentals and traders' attitudes have changed.	4)	Packers may have purchased sufficient hogs for the week, which will mean lower cash Friday and possible lower futures.