The report on Friday was considered somewhat negative to the nearby futures and a bit supportive to the August contract. On-Feed supply on May 1st is at a 4-year low for this time of the year at 97.2% of last year with traders expecting slightly less. Placements in April were expected to be around 6% above last year but came in only 4.2% higher. This is seen as supportive to the August contract. Marketings were expected to be down 6% from last year but actual marketings were down almost 7%. This is somewhat negative for the June contract and the sluggish marketings pace could be seen as slow demand as well. The market moved sharply higher early in the session on Friday but a weak beef market at mid-session, fears of slow demand and positioning ahead of the Cattle-on-Feed report helped to spark long liquidation selling into the close. Cash cattle traded at $85.00 in the Texas panhandle Friday which was unchanged from the previous week and seen as somewhat disappointing to some traders. The Commitment-of-Traders reports on Friday showed the market slightly oversold as trend-following funds continue to build a net short position in cattle. They increased their net short position by 1,400 contracts for the week to 7,422 contracts and the selling trend is a short-term negative force. Index funds were light sellers and other traders were quiet. The estimated cattle slaughter came in at 126,000 head Friday and 39,000 head for Saturday. This brings the total for last week to 678,000 head, up from 672,000 last week at this time but down 6% from year ago. Boxed beef cutout values were down 84 cents at mid-session Friday and closed 87 cents lower at $145.73. This was down from $146.99 a week ago. The monthly cold storage report on Friday afternoon was considered slightly supportive to the market with end of April beef in cold storage at 410.9 million pounds which was down 1% from last year and down 4% from the previous month. The normal 10-year average change for the month of April is for the market to show a decline of near 2% so the report looks slightly supportive to us.
TODAY’S GUIDANCE: With on-feed supply at a 4-year low as of May 1st, the market should continue to find support from the supply side but demand factors continue to work against the bulls as the economy has been emitting weaker signals and traders expect more unemployment ahead. August cattle is beginning to move higher after the recent consolidation as the weak demand may be discounted. August cattle support moves up to the 83.40-83.22 zone with 84.72 as next resistance.