June live Cattle Analysis – 05/08/2022

June live cattle could struggle through expiration even though the contract is already trading at a discount to the cash market. The USDA has forecast the average price for cash finished cattle this quarter at $139 which, based  on historical experience, would imply a trading range for the June contract between $126 and $139 per hundredweight. A scatter study displaying the spring early summer high for the June live contract as a function of per  cap domestic beef supply would also suggest the June contract is trading near the expected high. Declining US cattle inventories and high priced corn making finished cattle more valuable are the major bullish hazards to short cattle futures positions. USDA will issue revised cattle market  forecasts on May 12. 2022.