Following moderate trade over the last two days,
cash cattle markets appear to be essentially done for the week.
Although the potential for some clean up trade may develop, the tone of
the market is expected to be set with prices at $114 to $116 live and
$184 to $185 dressed. Generally cash prices for the week were steady to
$2 per cwt lower depending on the area of the country and delivery terms
for cattle sold. Futures trade is expected mixed as traders adjust to
outside markets early Friday but quickly turn attention to the upcoming
cattle on feed report where pre-report expectations point to a strong
shift higher in overall cattle in feedyards as well as increased
placement levels. If the report is anywhere near the early estimates, a
bearish tone is expected to hover through the complex. A portion of this
bearishness has already been worked through market prices, but
increased volatility early next week may quickly develop.
Narrowly mixed trade is expected early Friday
with limited new information available for the hog complex to trade at
the end of the week. The underlying concerns surrounding the trade war
with China is being countered by overall global demand for pork in the
wake of African swine fever. This will continue to be the plot of the
lean hog complex over the near future with very little additional
information on either issue available in order that traders can put
specific numbers too. This will become a challenge through most of the
summer as the anticipated target will continue to steadily move
day-to-day, and will likely keep markets swinging from one direction to
another. The fact that China was back in the market last week buying
pork, is encouraging, although given the overall history or China sales,
until the product is shipped, it should not give traders too much
confidence. Cash trade is called steady to $1 lower Friday morning with
bids scattered through the range. Expected slaughter Friday is at
458,000 head. Saturday runs are expected at 43,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | The upcoming Memorial Day holiday weekend is expected to spark additional buyer support and focus on demand strength through the complex. | 1) | Growing concerns of expanding cattle supplies ahead of the cattle on feed report is likely to cause market pressure as traders adjust to potential cattle placement levels. |
| 2) |
The ability to hold short-term
support levels of $109.50 per cwt in June futures is helping to create
additional technical interest through the entire complex.
|
2) | The long holiday weekend may create additional pressure Friday with limited trade volume expected through the end of the week, as well as traders having to hold any cold storage report data until Tuesday when markets reopen following the holiday break. This may add a bearish tone to the complex next week. |
| 3) |
Strong cash hog support late
Thursday helped to regain overall market confidence that tighter market
ready hog supplies are seen at the end of the week, pointing to
additional further clearance over the near future.
|
3) | Sharp losses in pork cutout values once again focus on wide primal market shifts and the concern that summer domestic demand is being hampered by previous price support. |
| 4) | Active export sales to China in weekly export sales report is expected to continue to bring stability to the entire lean hog complex over the near future. This may help spark additional underlying support through the entire complex. | 4) | The overall trade deal with China and overall global economic concerns will continue to hold a dark cloud over the hog complex as traders remain uncertain of a timeline of even direction that the market will take before any resolution is seen. |
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| #completecalfcare |
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