Written Commentary
MORNING LIVESTOCK FUTURES OUTLOOK
CATTLE COMPLEX
A strong start for the cattle complex this week as retail demand concerns eased after the Dow Jones made a new all-time high yesterday. August live cattle took out last week’s high yesterday but the June high at 245.22 is the next significant resistance. Screwworm detections continue to expand a now have reached at least a dozen and the USDA is stepping up surveillance and planning to enter an agreement with the Department of Homeland Security to work together on screwworm response efforts. Live cattle open interest yesterday jumped nearly 4000 contracts. Consumer demand for more protein continues to be a bullish factor for the beef market and the bulls have the edge. Light cash trade was reported in the north yesterday at 254, slightly under the weighted average last week. The 5 – area, 5 – day weighted average for the week stands at 255.95, unchanged from the end of last week. Showlist sizes this week in Texas are down 1685 to 76,221, up 5095 in Kansas at 74,025 and up 3500 in Nebraska/Colorado to 53,600. The USDA estimated cattle slaughter came in at 99,000 head Monday. This was down from 102,000 last week and down from 100,782 a year ago. The USDA boxed beef cutout was up $2.45 at mid-session Monday and closed $3.12 higher at $395.05. This was up from $392.20 the previous week.
LEAN HOG COMPLEX
Hogs once again followed the trend yesterday of limited follow-through on rallies and closed lower after Friday’s strong session. The overall trend remains weak and the market needs to confirm a technical bottom before buyers are going to get aggressive. The market has failed to follow the strong seasonals for this time of year. The difference in the market from a couple of months ago is now Managed Money is holding a short position of near 14,000 contracts, rather than a large net long like they were back in the spring. The shift is likely to mitigate how much further the market can fall but the trend remains lower for now. CME Lean Hog Index as of June 11 was 92.75, down -0.15 for the day and up 0.15 versus a week ago. The USDA estimated hog slaughter came in at 484,000 head Monday. This was up from 465,000 last week and up from 475,481 a year ago. The USDA pork cutout, released after the close Monday, came in at $97.11, down 45 cents from Friday and down from $98.79 the previous week. Open interest yesterday was down marginally and remains near six-month lows.
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