Friday Morning Livestock Market Update - Trader Positioning Ahead of COF Report Will be Evident

GENERAL COMMENTS:

Weekly export sales were positive, increasing 42% from the previous week. That was not enough to underpin the market throughout the day as traders turned their attention to the Cattle on Feed report and began positioning ahead of the report as Thursday progressed. The report has been known for its surprises and this one will be no exception due to the wide estimate for the placement number. Estimates for the report are for an on-feed number on May 1 of 99.1% of a year ago. Placements in April at 93.3% and marketings at 109.5%. The range of estimates for the on-feed number is 97.9% to 100.5%. Placements again have a wide range of 86.5% to $104.5% and will keep traders cautious going into the report. The range for marketing is from 108.6% to 110.7%. Boxed beef prices were mixed with choice down $2.33 and select up $0.47. The April Livestock Slaughter Report released Thursday showed beef production at 2.30 billion pounds, 11% above April 2023. Cattle slaughter totaled 2.73 million head, up 7% from a year earlier with the average live weight being 1,395 pounds, up 41 pounds from April 2023.

Hogs tried but could not hold the gains that developed Thursday. Support remains elusive with bearish traders trading the trend. The market is overdone to the downside but may remain that way until positive support develops from cash and cutouts. The National Direct Afternoon Hog report showed a gain of $0.44 but was offset by cutouts declining $1.38. Weekly export sales were good at 26,300 metric tons (mt), which may have provided brief early support until the buying dried up. Pork production in April totaled 2.32 billion pounds, up 9% from April 2023. Hog slaughter reached 10.7 million head, up 10% from a year earlier. The average hog weight was one pound lower at 290 pounds. Saturday slaughter is estimated at 12,000 head.

	BULL SIDE		BEAR SIDE
1)	Light cash cattle trade on Thursday at $1 to $2 higher with a few sales $5 higher. Packers did not want to wait until after the report and possibly be short-bought for the week.	1)	Selling in the cattle complex may take place on Tuesday if April placements are higher than the trade expectations.
2)	Higher cash trade would support futures once the Cattle on Feed report is released and digested over the long weekend. There is a discount of cash to futures.	2)	Further selling of cattle futures may be evident Friday as traders position themselves ahead of the report.
3)	The further hog futures decline and the more oversold they become, the greater the potential for a substantial price retracement.	3)	Hog futures continue to post lower lows, keeping sellers aggressive as they trade the trend. Fundamental support remains elusive.
4)	Lower prices should stimulate greater demand. The volume of pork for the Memorial Day weekend may be realized next week as retail will need to restock shelves.	4)	The packers may not be aggressive Friday in the cash market as they may have already purchased sufficient hogs for the week.