Friday Morning Livestock Market Update - Hogs and Pigs Report Provides Little Direction

GENERAL COMMENTS:

Cash cattle trade is being pushed back until Friday, leaving traders guessing what will transpire. There is optimism for higher cash as feedlots hold out. There were a few dressed cattle traded in Iowa but insufficient to provide solid direction. The June live cattle contract goes off the board Friday and showed a strong gain Thursday with the market closing at a contract high. August will take over as the lead month and currently shows a discount of nearly $6.00. Weekly export sales showed improvement over last week at 16,700 metric tons (mt), up 13%. Boxed beef was mixed with choice up $0.48 and select down $0.16. Feeder cattle prices remain strong at auctions, but futures are waiting for cash cattle to trade to provide solid direction.

The much-awaited Hogs and Pigs report came and went without much fanfare. The report is considered neutral. All hogs and pigs on June 1 were at 101% of last year and slightly lower than the average estimate. Hogs kept for breeding were at 97% with a trade estimate of 97.8%. Hogs kept for marketing were at 102% of last year with the trade estimate of 101.6%. This report likely will not be much of a market mover. Weekly export sales were supportive with 39,220 mt sold, an increase of 83% from the previous week. The National Daily Direct Afternoon Hog report was up $0.39 with a weighted average of $89.03. Unfortunately, cutouts declined by $0.62.

	BULL SIDE		BEAR SIDE
1)	The August live cattle contract will take over as the lead month to close out the week and holds nearly a $6.00 discount to the expiring June contract.	1)	Cattle traders were cautious yesterday even though there is optimism over better cash. Steady or lower cash trade may trigger heavy selling.
2)	Feedlots are holding for higher cash and packers may need to pay higher prices to obtain the cattle they need for slaughter.	2)	High prices will cure high prices and the cattle market may be near the point where demand may be impacted.
3)	Now that the hog report has been released and digested traders might be willing to buy into the market at these lower prices.	3)	Both cash and cutouts continue to struggle as the market tries to find solid support. Pork demand remains less than desired with continued strong slaughter.
4)	The strong pork export sales may reflect international buyers taking advantage of the lower pork prices.	4)	Hog weights should be declining seasonally, but remain significantly higher than a year ago. This leaves plenty of pork available to the market.