GENERAL COMMENTS: Cattle buyers, after reviewing showlists at the start of this week, may use the weakness in Monday's futures trade as justification for lower bids, especially with the overall trade-war-infected environment of commodity bearishness. According to the closing report, the national hog carcass base is $0.35 higher ($72.00-$81.50, weighted average $79.27).Corn futures settled 5 to 7 cents lower alongside predictably steeper China-related soybean losses. The stock market closed modestly lower, off 13.17 points in the SP 500 Index (2932.47).
LIVE CATTLE: Live cattle futures' downward trend accelerated Monday with the June contract dropping $1.15 per cwt and the August down $0.75. Total open interest was already falling during recent sessions as speculators had been closing out previous long positions, but when Monday's sell-off in hog futures was stymied by daily price limits, bearish livestock futures traders could still turn to cattle. Beef cut-outs: mixed, up $0.69 (select, $213.98) to down $0.36 (choice, $227.00) with light-to-moderate demand and moderate offerings (99 total loads of cuts, trimmings, and grinds).
TUESDAY'S CASH CATTLE CALL: Lower. Showlists have landed in a bearish environment this week.
FEEDER CATTLE: Pasture and range conditions were 60% good to excellent in Monday's Crop Progress report with notably high ratings in Midwestern states, which is promising for summer stocking operations. Drought has basically disappeared from cattle country everywhere except New Mexico and one pocket of Wyoming. However, the direction of futures trade Monday was clearly decided by the bearish overall mood in the agricultural sector. The August feeder contract displayed the deepest losses, down $2.025 per cwt, but all the 2019 contracts fell to fresh contract lows at the start of Monday's session. CME cash feeder index for 05/02: $141.20.
LEAN HOGS: This is what happens when a country escalates a trade war with China, a top-three pork export market: U.S. hog futures prices were locked limit down (-$3.00) all day Monday, from the June 2019 contract all the way out to the May 2020 contract. On Tuesday, the daily price limit will be expanded to $4.50 per cwt. Even if Chinese demand for foreign pork remains high due to their own Asian swine flu concerns, and even if they ultimately buy that pork from the U.S., the potential for increased retaliatory tariffs means prices would have to come down in that scenario. Carcass value closed moderately higher Monday afternoon with prices firm so far for all cuts except loins and ribs (i.e., down $0.82). Pork cut-out: $82.89, up $0.88.CME cash lean index for 05/02: $83.02, down $0.21 (DTN Projected lean index for 05/03: $79.98, down $3.04).
TUESDAY'S CASH HOG CALL: Lower. Not just futures traders, but hog buyers, too, are expected to reflect the trade war concerns in their cash market outlook.
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