Monday Morning Livestock Market Update - Cattle Find Strong Support

GENERAL COMMENTS:

Cattle futures could not help but increase as cash cattle traded higher Friday. Feedlots held out for higher cash and received it. Northern dressed cattle traded as much as $5.00 higher with Southern live cattle trading $2.00 higher. It appeared cash would be stronger but it was not expected to see these gains. But when boxed beef prices continued to increase, packers had to step up to purchase the cattle needed to meet demand. This may not be repeated this week as the buying ahead for Memorial Day weekend may be finished. Live cattle futures broke through chart resistance which may increase further technical buying. The Commitments of Traders report showed traders adding 966 contract, bringing their net-long futures positions to 41,720 contracts. Feeder cattle moved to a net-long futures position of 4,411 contracts, an increase of 508 futures contracts.

Hog futures could not find any solid support throughout the week. The move to new lows sets a negative tone that will be difficult to overcome in the current market environment. Hog futures closed lower for the week with funds continuing to reduce their long positions. The Memorial Day demand so far is not as great as anticipated or there is sufficient supply to meet the increased demand. The strong slaughter keeps sufficient supply available with packers not having to be aggressive as the hogs are readily available and at higher weights. The National Direct Afternoon Hog report showed cash down $0.76 with the weighted average at $88.57. Cutouts posted a gain of $0.58 but that was not enough to provide support. The Commitments of Traders report showed funds reducing their long positions by 8,936 contracts and are now holding a net-long futures position of 57,102 contracts.

	BULL SIDE		BEAR SIDE
1)	Strong beef demand and tighter supplies support higher prices. The trend may have turned up.	1)	The strength of cash this week may not be a repeat of last week. The packers will hold back, anticipating demand will slow after the holiday.
2)	The studies done by USDA find that cooking beef that was inoculated with a high dose of the H5N1 virus and cooked at the recommended temperatures eliminated any presence of the virus.	2)	Beef prices are moving to levels at which they may find consumer resistance.
3)	Hog futures are oversold and may see some stability ahead of the Memorial Day weekend.	3)	Hogs made new lows Friday, leaving the market in a downtrend. Fundamental and technical support remains elusive.
4)	There could be increased demand for pork this week as consumers will purchase for grilling this weekend.	4)	Even though the slaughter pace has increased, there are sufficient hogs available with packers less aggressive in the cash market.