Thursday Morning Livestock Market Update - Quarterly Hogs & Pigs Report Today

GENERAL COMMENTS:

The floodgate of cash activity still has not opened as packers and feedlots have yet to come together to agree on prices. Cash activity should take place Thursday. Overnight corn futures will not provide the catalyst for cattle to trade higher as it did the past two days. Stability might be seen in grains as positioning is done ahead of the Quarterly Stocks and Planted Acreage report. Boxed beef continues to struggle with choice down $1.33 and select down $1.75. This will leave packers unwilling to pay more for cattle. Feeder cattle have capitalized on the weakness of corn but that may now have run its course for the time being. Feeder cattle have made a monumental gain over the past week, leaving chart gaps in its wake. Futures may be hard pressed to move higher, even though demand for feeder cattle is good.

Hog futures showed continued spread trading as traders prepared for the Quarterly Hogs & Pigs report to be released Thursday afternoon. The estimate for all hogs and pigs on June 1 is 99.3%, kept for breeding is 99.23%, and kept for marketing is 99.3%. The farrowing intentions may be the area of most interest as June to August intentions are estimated at 97.4% and September to November intentions at 97.3% of last year. Cutouts were down $1.08 Wednesday with hams showing the most weakness with a loss of $7.49. Saturday slaughter is estimated at 65,000 head.

	BULL SIDE		BEAR SIDE
1)	Feedlots are expected to hold out for nothing less than steady prices. This would provide support and limit any technical selling.	1)	Continued weakness of boxed beef may limit upside cash price potential. Demand has shifted lower, resulting in lower prices to stimulate consumer buying.
2)	Nearby cattle supplies continue to remain tight and will not change anytime soon. Demand has slowed but continues to remain strong.	2)	Price strength in cattle futures based solely on the weakness of corn is a weak rally.
3)	Traders may have positioned themselves ahead of the Hogs & Pigs report with spreading trading having run its course. Deferred contracts may rebound somewhat.	3)	Hogs have not been able to continue the recent price rally with the market having priced in current fundamentals. Futures might consolidate for a time.
4)	Weekly export sales are expected to be better than last week, indicating international demand remains strong.	4)	July, August, and October hog futures have chart gaps below the market that could eventually be filled.