Cattle futures had a choppy trade Tuesday with the June futures trading inside yesterday’s range and closing at 136.25. The volume was light with only 19,000 contracts traded. I heard on Monday that there have been cash trades at the 140 level in both Kansas and the Oklahoma/Texas region on heavy volume with about 6200 head traded. It’s starting to look like cash trades are being divided by regions with the North and Midwest reporting bids at 145 while the South and Southwest have been steady around the 140-141 range. Although this could show some support to the market for the longer term, I still believe the June contract will trade lower in the near term and retest the monthly lows around the 132-price area. According to the USDA, estimated cattle slaughter came in at 125,000 head yesterday which was up 112,000 from last week and 118,000 from last year.
June lean hog futures took another rough day Tuesday with the market showing some follow through from Monday’s limit down day. Hogs finished down 2.85 Tuesday after the limits were expanded to $7. Technically, the chart pattern is showing a bearish head and shoulders reversal pattern and combined with the higher volume that was traded Tuesday, I believe we could see a breakdown in the June contract to the 105-price level. Finally, the USDA pork cutout values fell sharply yesterday to 103 from 109.45.