GENERAL COMMENTS: Active selling quickly moved back into all livestock trade Wednesday. Cattle and hog futures posted triple-digit losses as traders focused on the uncertainty surrounding a trade deal with China. Although the next round of talks is set for Thursday in Washington, D.C., there is concern about changes to previously discussed terms. Additional cash cattle trade was reported Thursday with dressed deals in the North at $190 to $194 per cwt. This is $1 to $5 per cwt lower than Wednesday's prices and $4 to $8 per cwt lower than last week. It is likely that dressed Northern trade is done for the week, as is trade in the South. There still may be some deals done on a live basis through the North, but the weaker tone has already been well established. Asking prices on cattle left on showlists are $122 live and $198 to $200 dressed. The National Daily Direct afternoon hog report was $0.23 lower ($72-$82, weighted average $79.04) on 6,070 head sold. Corn futures fell in light trade with July down 2 1/4 cents per bushel. The Dow Jones Index was 2 points higher with the Nasdaq down 20 points.
LIVE CATTLE: Despite early buyer interest Wednesday morning, pressure late in the session pushed live cattle futures $1.15 to $1.80 lower. The attempt by buyers to stabilize the complex by moving into an extremely oversold market was overrun by emotional selling. Much of the pressure continues to be due to uncertainty over a trade deal between the U.S. and China as well as domestic demand in the coming weeks and months. Spot-month June closed at $111.07 per cwt, breaking through support levels set in late 2018. The next level of support is the August 2018 low of $106.25. The extremely bearish trend will need to slow before buyers are willing to step back into the complex. Beef cut-outs: lower, down $4.34 (select, $207.49) to $0.86 (choice, $223.01) with moderate-to-good demand and heavy offerings, 181 loads (86 loads of choice cuts, 54 loads of select cuts, 23 load of trimmings, 18 loads of coarse grinds).
THURSDAY'S CASH CATTLE CALL: Steady with early week trade. Trade that trickled into the market Tuesday and Wednesday has quickly eroded following weakness through the entire complex. Trade is expected to be done in the South, although some cleanup trade is likely for Northern live trade over the next couple of days.
FEEDER CATTLE: Feeder cattle futures tested long-term support as technical pressure continued to build. Futures closed $1.35 to $1.70 lower. The sharp triple-digit losses quickly swept through the entire feeder cattle complex with nearby contracts reaching and setting contract lows once again. The front-month futures contract settled at $135.77 per cwt, which is testing long-term lows on the continuous chart set in March 2018. A move below $135.60 per cwt would leave markets at two-year lows and would likely spark additional market weakness. The technical pressure in cattle trade over the last month is starting to affect fundamental market support across the entire cattle complex. CME cash feeder index for 5/7 is $136.57, down $0.10.
LEAN HOGS: Sharp losses developed in lean hog futures as traders focused on the potential erosion of U.S. trade talks with China. Futures settled mixed, $2.10 lower to $0.52 higher. The lightly traded May futures contract held onto limited gains Thursday, but the pressure across the rest of the complex was evident through the last half of trade Thursday. Triple-digit losses quickly developed where narrowly mixed trade was seen early in the session. Fears that trade talks between the U.S. and China may be falling apart is causing nervousness through the complex. It is expected the U.S. will increase tariff levels to 25% on $200 billion of Chinese goods. This is likely to have an even more dramatic impact on pork values and the lean hog prices no matter what sales activity is reported in the Export Sales report Thursday morning. Firm pressure has been driven by late 2019 contract months, which are focused more on long-term product movement and export activity than current supply-and-demand issues. Pork cutouts slipped following increased softness through the week. Pork cutout values fell $0.73 per cwt, moving to $84.94 per cwt on 283 loads. CME cash lean index for 5/6 is $82.63, down $0.19. DTN Projected lean index for 5/7 is $82.68, up $0.05.
THURSDAY'S CASH HOG CALL: Steady. Hog buyers are working in an extremely uncertain environment, but have had time to factor in the week's trade developments.
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