Light cash cattle trade developed in the South
Wednesday afternoon at $115 per cwt. This is generally steady with last
week's weighted average, and likely enough business in these areas to
set the tone for the rest of the week without a major disruption in
futures trade. Business in the North is undeveloped, but may soon follow
with bids expected to redevelop at $115 or higher live and $185
dressed. Asking prices on cattle left on showlists remain at $117 to
$118 live and $188 and higher dressed. It is uncertain if active trade
will develop Thursday, or if the back and forth will continue until
sometime Friday as typically seen in the North. Futures trade is
expected mixed with traders still concerned about the lack of pressure
early in the week, especially in feeder cattle. Traders will closely
follow the direction of the corn and soybean market due to wet weather
and lack of planting progress in many areas of the country. This is
expected to have a dramatic impact not only on feed prices, but on the
overall availability of feed at the end of the year.
Firm follow-through support is expected to
redevelop across lean hog futures trade with the previous market tumble
still leaving the complex ripe for additional corrections on the upside
of the market. This could add even more uncertainty to the complex as
traders focus on more uncertainty with China while overall pork demand
the rest of the year is expected to remain strong. Due to the holiday
Monday, export sales reports will be delayed until Friday, which is when
we will know if additional pork sales have developed in China. Traders
are also starting to focus on increased potential exports to other
countries who may be sending pork to China. With the China trade war
still in full swing, the role of U.S. pork may be to backfill into other
countries in order to replace product they export to China. Cash trade
is called steady to $2 lower Thursday morning with most bids $1 lower.
Expected slaughter Thursday is at 475,000 head. Saturday runs are
expected near 223,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Active buyer interest moving into
live cattle midweek is creating buyer support. This is building on the
underlying support levels which have been defended this week.
|
1) |
Feeder cattle futures remain under
pressure with continued concern surrounding the ability to supply enough
corn supplies due to the late and delayed planting.
|
| 2) | Corn prices broke away from the aggressive double-digit rallies Wednesday, which sparked increased late-day interest in feeder cattle trade. Any reprieve from the skyrocketing grain market shifts is expected to support cattle trade. | 2) | Lack of cash market support in the last week of May is causing some additional long-term concerns that current cattle and beef supplies may overwhelm summer demand expectations, limiting the ability to sustain recent beef values. |
| 3) | Strong triple-digit gains quickly and aggressively flooded back into lean hog trade midweek. This could indicate a change in market direction as traders focus on upcoming seasonal demand and tighter live hog supplies. | 3) |
Active pressure in pork cutout
values focused on a double-digit loss in rib and belly cuts. With summer
demand building, pressure in these seasonal cuts is creating increased
concern about overall demand growth.
|
| 4) | Given the wide trading range the last several weeks, technical market shifts could mean prices will go sharply higher in early June. This could allow for a wide market swing in the upcoming days and weeks as buyers step back into the complex. | 4) |
Despite the midweek rally in hog
futures, the entire complex still remains under pressure as traders try
to defend short-term support levels. Without a strong end-of-the-month
market close, trade pressure may quickly develop as prices continue to
give back gains that developed during March.
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| #completeherdhealth |
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