Limited cash trade interest is expected early
Wednesday morning following the holiday Monday delaying the schedule
from both packers and feedyard managers. Bids and asking prices are
still unavailable but likely to see some additional interest through the
midweek trading day. The support in boxed beef values and stability in
futures trade should give more momentum to asking prices steady to
higher with feeders looking for steady money by the end of the week.
With the trend over the last few weeks moving to Wednesday trade in the
South, it is likely that an emphasis on getting at least some deals done
before the end of the day will be seen, But it is uncertain if that
will happen due to the holiday-shortened week. Futures trade is expected
mixed with additional pressure likely to develop in feeder cattle trade
based on continued support in corn markets. Sharp double-digit gains
are seen in corn and soybean markets in overnight trade following
another bullish crop progress report where planting progress is falling
further behind. Corn planting is at the slowest pace in at least 39
years with only 58% of corn planted as of last week. This will continue
to reshape the direction of cattle markets due to feed costs becoming
even more uncertain.
Active pressure is expected to continue early
Wednesday morning following technical pressure, which has developed in
all nearby lean hog trade over the last week. Continued concerns
surrounding the ability to expand export trade continues to spark
uncertainty through the entire complex. This may add even more
volatility through summer contracts as traders grapple with the
potential that current production and domestic demand will not be able
to sustain current market prices without help from export support. There
is still uncertainty surrounding the potential to move pork to China
even at higher prices and overall tariff levels holding. Traders are
still holding out that a long-term deal will develop, but this continues
to erode recent support in lean hog trade. Cash trade is called steady
to $1 lower Wednesday morning with most bids generally steady. Expected
slaughter Wednesday is at 466,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Strong triple-digit gains in boxed beef values is pointing to renewed underlying support in beef values following the Memorial Day holiday. This is likely to help bring a sense of stability into live cattle prices through midweek. | 1) | Double-digit gains in corn and soybean markets has caused aggressive production pressure in feeder cattle trade. This will reshape overall feed cost projections, and directly affect the amount paid for feeder cattle over the coming weeks and months. |
| 2) | Despite sharply higher grain prices and tumbling feeder cattle markets, buyer support in live cattle futures has remained steady to firm through early-week trade. This is helping to rekindle noncommercial trader interest during late May. | 2) | Corn planting is 58% completed as of the end of last week. This is the slowest planting rate seen in at least 39 years with many states already past the prevented planting date set by federal crop insurance. This lack of corn planting is expected to have a dramatic impact on long-term prices and feed costs. |
| 3) | Aggressive triple-digit movement swiftly shifted pork cutout values higher with strong gains in most primals while belly cuts posted double-digit support ahead of seasonal market support focusing on bacon demand. | 3) | Sharp triple-digit losses through the last two trading session has continued to aggressively break through support levels in nearby contracts. This market weakness is likely to add market liquidation through the entire complex. |
| 4) | Long-term demand for pork continues to be seen in domestic and global markets, despite the trade uncertainty with China. Traders will continue to look for additional export sales developing in the export sales report late this week. | 4) | Cash hog values continue to slowly but steadily erode through the week despite recent support in pork values. Packers are keeping their hand on the production throttle, limiting the amount of hogs needed to be purchased and overall output of pork. This is an attempt to rebuild packer margins through early summer. |
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| #completeherdhealth |
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