The cash cattle trade did not develop in earnest until after the futures markets closed, with prices $2.00 to $3.00 higher. Feedlots held out to get what they wanted. Even though the packers have surrounded themselves with more cattle, they continue to purchase, maintaining a cushion of supply. Even though packer margins are not good, they cannot afford not to meet demand. Boxed beef prices continue to increase, with choice up $0.58 and select up $2.37. The Cattle on Feed report is not expected to shake up the market Monday as the numbers were not far outside of the trade estimates. One feed as of May 1 was 98.5% of a year ago and right on the estimate. Placements were 97.4% and slightly above the average estimate, with marketing at 97.5% and above the estimate of 96.7%. The Commitment of Traders report showed fund traders reduced their net-long position in live cattle by 1,852 contracts to a net-long of 126,037. They increased their net-long position in feeder cattle by 2,005 futures contracts to a new record long of 32,800.
Hogs struggled throughout the day on Friday. There was little interest in supporting the market into the holiday weekend. Futures had another day of a lower high and a lower low. The July contract closed the chart gap on the decline. Hog futures were lower for the week, with June and July over $2.00 lower. Cash was lower on the National Daily Direct Afternoon Hog report with a decline of $0.43. This was not surprising as limited slaughter was expected on Saturday, with plants closed on Monday. The packers may aggressively begin the holiday-shortened week to purchase what they need. Pork cutouts posted a gain of $1.19. The Commitment of Traders report showed the fund traders as buyers of 9,828 futures contracts, bringing their net-long position to 87,807 contracts.
| BULL SIDE | BEAR SIDE | ||
| 1) | The Cattle on Feed report was supportive to the market in that the actual numbers were in line with the estimates and friendly compared to a year ago. |
1) | The placement number on the Cattle of Feed report was above expectations, which could cause some profit taking as traders trade the actual to the estimate. |
| 2) | Cash cattle traded higher last week, keeping the uptrend alive. Feedlots continue to hold for higher cash, and this week might be the same. |
2) | The June and August live cattle contracts have chart gaps below the market that may be filled sooner rather than later. |
| 3) | The July hog contract closed the chart gap that remained below the market. This could increase the buying interest of technical traders. |
3) | The August, October and December contracts had chart gaps below the market that may be filled. |
4) |
The packers might be more aggressive this week as they need to purchase hogs to make up for one less day of slaughter with a large Saturday kill. |
4) | The packers may wait to see the level of pork movement over the weekend before becoming aggressive in the cash market. |
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