It appears to me that the market seems to have put in a significant low based off of yesterday’s session (hitting a low of 131.025 before closing on the day at 133.55). There was a significant improvement in the pasture conditions and a large discount to the cash market which I believe is giving the market support around 133-134. Today’s sessions saw a turnaround from yesterday as it closed down $1.20, I believe we will see some choppy trade sessions for the time being before the Cattle on Feed Report which comes out on the 20th after the market close. If we get follow through selling pressure tomorrow, I suspect the market to find its next level of support down near the 128-price level.
I saw on Monday, the cash trade was quiet with only 40 head reported in the Iowa/Minn region traded at 140. The 5 area weighted average came in at 143.42 which is up slightly from the previous week of 143.34. The USDA estimated cattle slaughter numbers came in at 121,000 head which was up from 111,000 last week and up from 113,000 from a year ago.
The Hog market continues to struggle to find any support as I am hearing weights still remain high and traders have growing concerns with the fact that feed grain is still rather expensive. This is opening up the opportunity for a period of increased slaughter numbers of heavier hogs when the market seems to still be transitioning from a period very strong exports. I anticipate the market to continue to trade lower until there is any bullish fundamental news that comes out.
According to Friday’s Commitments of Traders report, it showed that managed money traders were net sellers of roughly 14,544 contracts (week ending May 3) which brought down their net long position to 29,542The USDA pork cutout came in at 101.97 when it was released yesterday, which was down from 103.01 from Friday and 104.66 from the previous week. The slaughter numbers were 468,000, down from 482,000 last week and down from 477,000 from a year ago.