We should start to see the surfacing of cash cattle potential Wednesday (i.e., initial bids and asking prices). Yet it's possible that significant trade volume will not develop until Thursday or later. Live and feeder futures should open moderately higher, supported by follow-through buying and cash premiums.
Look for the cash hog trade to open at midweek with generally steady bids. Saturday slaughter plans are still expected to total close to 30,000 head. Lean futures should open moderately lower, checked by spillover selling and cash discounts.
| BULL SIDE | BEAR SIDE | ||
| 1) | Although cattle futures only closed modestly higher on Tuesday, the board's ability to hold Monday's big rally was impressive, supporting hopes of a near-term bottom. | 1) | Beef cutouts closed sharply lower again Tuesday, reflecting both large box supplies and at least temporarily disinterested meat buyers. |
| 2) |
Generally speaking, forecasts of Memorial Day weather across most of the country looks favorable for strong beef movement over the long weekend ahead.
| 2) | Total red meat supplies in freezers as of April 30 were up 4% from the previous month and up 7% from last year. Total pounds of beef in freezers were up 2% from the previous month and up 3% from last year. Frozen pork supplies were up 5% from the previous month and up 9% from last year. |
| 3) | The seasonal tendency is for June hog futures to trade about sideways near-term before trending higher into expiration. | 3) | The cash hog trade has definitely lost power this week with live and dressed sales barely holding steady. In fact, this faltering in country momentum probably explains in part why the premium structure of lean futures seems to be cracking. |
| 4) | Between the light hog kill on Saturday and an abbreviated Monday kill, the stage should be set next week for a significant jump in the pork cutout. | 4) | Lean futures crashed hard on Tuesday with triple-digit losses suffered in virtually all 2018 months. More specifically, October and December plunged to new contract lows. |
CATTLE: (Fox News) -- Treasury Secretary Steven Mnuchin says President Trump does not have a firm deadline on ending the NAFTA renegotiations.
Mnuchin says Trump is more concerned about getting a good deal.
"The President is more determined to have a good deal than he is worried about any deadlines," Mnuchin says. "So whether we pass it in this Congress or we pass it in the new Congress, the president is determined that we renegotiate NAFTA." But Mnuchin indicates Trump could still follow through on threats to withdraw from the pact or take other action.
HOGS: (Just Food) -- Brazilian meat giant JBS has become the country's first processor to export pork to South Korea following a government-led agreement secured last week.
Blairo Maggi, Brazil's Minister of Agriculture, Livestock and Supply, said initially four accredited meat packers from the state of Santa Catarina have gained clearance to ship pork to the Asian nation.
And more are expected to follow after Brazil was awarded foot-and-mouth free status from the World Organization for Animal Health, opening up a market that the country's government says is worth US$1.5bn a year.
Under the deal, Brazil expects to export more than 30,000 tons of pork to South Korea per annum.
"With the declaration of a country free of foot-and-mouth disease, we will move on to other Brazilian states without vaccination soon,'' Maggi said. Negotiations between the two countries had been ongoing since September 2016. Meanwhile, one of the approved firms, JBS' subsidiary Seara, said Wednesday (21 May) it has closed the first round of sales. A shipment of 50 tons of pork is set to leave Brazil from the port of Itajaí, Santa Catarina, in the "coming days".
According to the statement from JBS, South Korea is considered the third-largest pork importer in the world and has one of the highest per capita intakes of the meat, estimated to be in the region of 33 kilograms per person each year. Antonio Augusto De Toni, executive director for exports at Seara, said: ''The Korean market imports an average of 35 tons per month of pork, therefore represents an enormous potential for the Brazilian pig."
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