Written Commentary
MORNING LIVESTOCK FUTURES OUTLOOK
CATTLE COMPLEX
Cattle finished sharply higher on Friday and the June contract tested the highs of the last 5 months. Cash trade came in higher last week and Easter beef demand is typically strong. Bearish factors like the weak stock market on Friday and the increase in Argentina beef imports into the US were ignored and the uptrend looks to be accelerating. The bulls have the clear edge. The JBS strike continues. COT data showed Managed Money increased their net long position by 4% in live cattle to just under 111,000. Cash trade Friday in the north was 235 – 238, $2 – $3 higher than trade on Thursday. There was light trade in Kansas that came in after the reporting deadline at 238, $3 – $4 higher than trade earlier in the week and $3 higher than the prior week. The 5 – area, 5 – day weighted average the week ended at 234.93, down from 235.08 the prior week. The USDA estimated cattle slaughter came in at 92,000 head Friday and 16,000 head for Saturday. This brought the total for last week to 520,000 head, up from 503,000 the previous week but down from 608,580 a year ago. The USDA boxed beef cutout was up $4.24 at mid-session Friday and closed $3.12 higher at $392.97. This was down from $400.11 the previous week.
LEAN HOG COMPLEX
June hogs finally turned decidedly higher on Friday, gapping up and closing strong, following the friendly hog and pig report on Thursday afternoon. Managed money traders as of mid-last week had decreased their net long position by 15,000 contracts to just under 102,000. However, Friday’s strong technical turn higher is an indication the market may have shaken off the recent bearish action and is ready to regain its footing. Cutout was strong late last week. This month, June futures had fallen nearly $9.00 on steady selling and an upside correction looks to be starting. CME Lean Hog Index as of March 25 was 91.46, down -0.19 for the day and down -0.58 versus a week ago. This is the lowest since March 13. The USDA estimated hog slaughter came in at 490,000 head Friday and 58,000 head for Saturday. This brought the total for last week to 2.524 million head, up from 2.491 million the previous week and up from 2.477 million a year ago. The USDA pork cutout, released after the close Friday, came in at $96.40, up $1.14 from Thursday but down from $99.05 the previous week.
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