Tuesday Morning Livestock Market Update - Higher Cash Hog Prices Expected

GENERAL COMMENTS:

Traders were unsure of the strength of cash this week as it may be difficult to see a repeat of last week. The strong demand ahead of the Memorial Day weekend may have run its course as boxed beef prices were mixed Monday with choice down $0.75 and select up $1.95. This may be the pattern for the week. Cattle futures made new highs but could not hold onto those highs before falling back. Four days of higher highs and higher lows may give more confidence to traders to remain aggressive buyers. Both live and feeder cattle came under pressure as grain futures increased. It has been some time since this has impacted cattle futures as grain futures have not been as focused on by cattle traders in a while. The Cattle on Feed report will be released Friday, but it is too early for traders to position for the report.

Hog futures continue to have a difficult time finding solid support. The uncertainty of cash during much of Monday kept traders cautious and strength unable to be maintained. The National Direct Afternoon Hog report showed packers were not aggressive with a decline of $2.44. Cash is expected to be higher Tuesday as weekend demand has been assessed and Memorial Day demand needs to be satisfied. The continued strong slaughter pace needs to be met. Cutout values were higher with a gain of $0.92.

	BULL SIDE		BEAR SIDE
1)	Steady or higher cash cattle will support the market and keep the uptrend alive. June live cattle futures hold a discount to cash.	1)	The upcoming Cattle on Feed report and the holiday weekend may keep futures trading sideways for much of the week.
2)	Cattle numbers remain tight and that will not change for a while. Good demand should keep a higher slaughter pace.	2)	Beef demand may slow as buying for Memorial Day may have run its course. Boxed beef prices may show weakness.
3)	The packers continue to run a heavier slaughter pace even with higher weights. This indicates pork demand is strong.	3)	New lows in hog futures again Monday indicate support remains elusive. Traders see little reason for upside strength.
4)	Hog futures are oversold with traders likely to cover short positions before the holiday weekend.	4)	Packers maintain a strong slaughter pace to meet demand and continue to find a sufficient supply of hogs without being aggressive.