Monday Closing Livestock Market Summary - Cattle Paper Explodes Higher, Excited By Suggestion of Greater Chinese Beef Demand

GENERAL COMMENTS

To no one's surprise, the cash cattle trade was not tested in the early rounds with buyers and sellers focusing exclusively on the distribution of new showlists. The late month fed offering looks modestly larger than last week, with only Kansas showing some declining in ready steers and heifers. According to the closing report, the national hog base $.13 lower ($59.00 to $65.16, weighted average $64.76). Corn futures closed fractionally higher, supported by dry Brazilian weather and sharply higher bean prices. Cheered by a potential trade war truce, the stock closed sharply higher with the Dow up 298 points and the Nasdaq in the green by 39.

LIVE CATTLE

Live cattle bolted higher on the opening thanks to news that the U.S./China trade war had been placed on "hold," and early week bulls never looked back. Contracts closed 147 to 252 points higher, jazzed by Trump's early morning tweets that China had promised to increase its purchase of U.S. agricultural goods. Live traders seemed quick to assume that beef was included in that promise. Besides this story and uncertain interpretations, live futures were also supported by aggressive short covering, oversold charts and cash premiums. Beef cut-outs: significantly lower, off $.94 (select: $207.52) to $1.39 (choice: $230.82) with light to moderate demand and moderate offerings (39 loads of choice cuts, 36 loads of select cuts, 16 loads of trimmings, 19 loads of ground beef).

TUESDAY'S CASH CATTLE CALL:

Steady to $2 lower. We should be in for a typically quiet Tuesday with both bids and asking prices poorly defined. Both sides will be carefully monitoring the board for hints of pre-holiday cash potential.

FEEDER CATTLE:

Feeders followed live contracts significantly higher with contracts settling 152 to 277 in the green. On an estimated run of 9,300 head (down from 10,070 last week, but up from 5,516 last year). Oklahoma City sold feeder steers and heifers steady to $2 lower. A limited offering of calves sold with a much lower undertone. 05/18: $133.63, off $.03.

LEAN HOGS:

Since lean hog trade saw the trade war story with greater ambiguity, buyers were unable to put it to any good leverage. In fact, lean contracts closed $10 to $70 lower. Specifically, all the political posturing on both sides made it unclear as to whether current Chinese tariffs on U.S. pork would remain in place. Needless to say, both bulls and bears are very anxious to get officials to clarify this situation. The carcass value jumped more than $2 higher, supported by better demand for hams, loins, picnics and ribs. Pork cut-out: $76.18, up $2.19. CME cash lean index for 05/17: $67.74, up $.73 (DTN Projected lean index for 05/18: $68.38, up $.64).

TUESDAY'S CASH HOG CALL:

Steady. Look for hog buyers to resume work in the morning with basically steady bids.