Thursday Morning Livestock Market Update - There is Much Uncertainty in the Markets

GENERAL COMMENTS:

Live cattle futures struggled Wednesday as the market fundamentals are not painting a bright picture. Some of the optimism for higher cash again this week has waned with steady money possibly not a potential. The weakness of boxed beef Wednesday was not what bullish traders wanted to see as it raised concerns over demand as we move into the grilling season. Choice boxed beef declined $1.82 while select fell $4.09. The packers may reduce slaughter to try to improve their margins. Heavier weights leave more beef supply available to the market, which has substantially reduced the price of beef trim compared to a year ago. This is keeping the market where it is and limiting upside potential. Feeder cattle have been trending lower eliminating half the gain realized in the second half of April.

Hog futures did an about face Wednesday as selling ran it course. Unfortunately, futures could not maintain their highs, leaving a mixed close. Concern remains over demand into the summer, keeping an overall negative attitude in the market. The strength of cutouts provided the aggressive buying interest with cutouts up $2.20, but it will take more to turn the market trend higher. Cash was lower on the National Direct Afternoon Hog report with a decline of $1.46 with further weakness expected Thursday. Weekly hog weights increased and remained well above a year ago. The weekly export sales report Thursday may provide direction.

	BULL SIDE		BEAR SIDE
1)	Cattle futures have been choppy and maintaining a sideways trading range. This could be building long-term support.	1)	Feeder cattle futures are trending lower and may provide an anchor on live cattle. Traders are uncertain over demand moving into the summer.
2)	June live cattle hold a discount to cash. If cash trades steady this week, part of the discount might be removed from the market.	2)	The expectation for cash cattle trade this week has become less optimistic.
3)	The turn in hog futures Wednesday may provide more confidence to traders to buy into the market at lower prices.	3)	Hog weights increase one pound to an average of 288.1 pounds. This is 2.5 pounds above a year ago.
4)	The strong slaughter pace should keep hogs current, keeping them from backing up in the market. This may keep packers actively looking for supplies.	4)	Even though the hog futures turned higher Wednesday, it does not indicate a bottom has been established. Futures need to build greater technical support or further weakness may unfold.