GENERAL
COMMENTS: Lean hog futures closed down the $3-per-cwt limit Friday,
which will trigger expanded limits Monday. Cattle futures also fell late
Friday, breaking through short-term support. From Friday to Friday,
livestock futures scored the following changes: Jun LC off $2.23; Aug LC
off $2.05; Aug FC off $1.85; Sep FC off $1.75; Jul LH off $5.10; Aug LH
off $2.72. Cash cattle trade appears to be done for the week following
light-to-moderate trade Thursday. A few scattered bids were seen at $109
to $110 per cwt live basis and $178 dressed, but the lack of interest
at the lower prices is likely to keep most cattle on showlists until
next week. The National Daily Direct afternoon hog report was $0.69
lower ($65-$76, weighted average $74.03) on 8,216 head sold. Corn
futures eroded Friday afternoon with July down 7 3/4 cents per bushel.
The Dow Jones Index was 34 points lower with the NASDAQ down 19 points.
LIVE CATTLE: Live cattle futures closed $0.42 to
$1.72 lower. The August contract led the market lower, falling $1.72
per cwt to close at $102.22 per cwt. With this end-of-the-week move, the
August contract broke through support of $102.80 per cwt set in May and
moved out of the sideways trading range it had been confined to for the
last couple of months. The live cattle market could come under pressure
again early next week given weaker fundamentals and technical pressure
seen over the last couple of days. The June 1 USDA Cattle on Feed report
showed a 2% gain from a year, which was above pre-report estimates but
is not likely to create significant pressure when trade resumes on
Monday. Concern that beef supplies will remain burdensome while demand
remains sluggish may continue to pressure the market. Beef cut-outs:
lower, down $1.93 (select, $199.55) to down $0.90 (choice, $219.82) with
light demand and moderate offerings, 99 loads (37 loads of choice cuts,
37 loads of select cuts, 10 loads of trimmings, 16 loads of coarse
grinds).
MONDAY'S CASH CATTLE CALL: Steady. Firm pressure
in cash and futures trade late in the week will likely soften initial
activity next week, although showlist distribution and inventory-taking
may be the limit of movement Monday.
FEEDER CATTLE: Feeder cattle futures closed
$1.05 to $1.32 lower. Even though corn futures fell 6 to 7 cents Friday,
it wasn't enough to support buyer interest in feeder cattle trade.
Contracts still remain in the current trade range, although a
breakthrough in support levels could bring about increased pressure next
week. CME cash feeder index for 6/20 is $131.37, down $1.62.
LEAN HOGS: Lean hog futures closed $0.52 to $3
lower. Losses quickly swept through lean hog futures Friday morning,
leading to limit losses of $3 per cwt in the first three contract
months. A lack of buyer support sparked technical pressure with prices
breaking through support levels. Contracts moving below $80 per cwt is
significant, as this is not only a three-month low, but is nearing lows
set in early 2019. A move below $76.46 per cwt in the August contract
($1.44 per cwt below current levels) would signal additional long-term
pressure and erase the entire market rally that was based on expected
China demand due to African swine fever losses. Growing concerns about
the ability to build export demand and reach a trade agreement with
China are once again eroding market support. Pork prices continued to
slide lower with triple-digit losses in butt, picnic and rib cuts. Pork
cutout values fell $0.71 per cwt, moving to $76.73 per cwt on 255 loads.
CME cash lean index for 6/19 is $79.55, up $0.06. DTN Projected lean
index for 6/20 is $79.14, down $0.41.
MONDAY'S CASH HOG CALL: Steady to $1 lower.
Continued pressure in cash and futures trade Friday is setting the tone
for additional cash market weakness next week. Most bids are expected to
be 50 cents lower, as packers secure end of the month needs. Monday
slaughter numbers are expected at 477,000 head.
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