Cash cattle trade has continued to trickle in
this week with trade actually starting Monday afternoon, and may
continue through Friday. At this point, most if not all of the trade in
the South appears to be finished, but there is likely to be some
additional trade developing in the North before the day is over. Even
though trade may still develop in some areas, prices are likely to be
set unless there is a major shake-up in futures trade or beef values.
Cash prices in the South have ranged from $112 to $114 per cwt, mostly
$113 per cwt and $2 to $3 per cwt lower than last week. Dressed business
in the North is mostly $183 per cwt. Futures trade is expected to be
mixed in limited trade following the late rebound on Thursday. Traders
will continue to follow the trade issues in China and Mexico, as this
could bring some late-week adjustments if any announcements are made
ahead of the weekend.
Lean hog futures are called mixed in a
narrow-to-moderate range as traders remain caught between firm long-term
demand expectations and looming trade issues. With tariff issues in
China and Mexico creating concern about the overall buying activity of
pork, some additional interest is likely to develop in the coming days
and weeks. The fact that China posted a strong pork sale in this week's
Export Sales report, buying 17,400 metric tons of pork last week, is
evidence that sales can still happen during the trade war. Moderate
price shifts are expected on Friday as traders try to find market
stability following the wide market swings of the week. This could add
increased additional but moderate price shifts through the session. Cash
trade is called steady to $1 lower Friday morning with most bids steady
to weak. Expected slaughter Friday is at 462,000 head. Saturday runs
are expected at 50,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Feeder cattle futures continue to hold recent gains, with nearby contracts surging over $6 per cwt since the end of May. This is creating a strong base for commercial traders to build on as they step back into the complex. | 1) | Traders remain concerned about corn supply and overall feed costs through early June. With planting progress behind schedule, the expectation is that this will impact not only the amount of corn available, but the quality of feed. |
| 2) |
Recent pressure in corn trade is
helping to relieve the stress on cattle trade at the end of the week.
Further end-of-the-week softness in corn and soybean trade could create
active buying in live and feeder cattle futures Friday.
|
2) |
Lack of upward movement in beef
cutout values this week has created sluggish market interest. Traders
are looking for additional support following the recent futures rally,
or market pressure may quickly redevelop.
|
| 3) | Underlying demand support for pork continues to grow after strong export sales were reported from China last week. The potential for these sales to become more regular will help bring additional stability to the entire complex. | 3) |
Moderate-to-firm pressure continues
in traditional "summer" pork products like rib and belly cuts. The
pressure in wholesale prices of these cuts is causing concern that
overall demand is lagging through early summer.
|
| 4) | Cash hog values appear to be stabilizing during early June, as packers are finding it harder to find market-ready hogs, and needing to dig deeper in their pockets in order to keep plants full. This is likely to help stimulate underlying futures market support through the end of the week. | 4) |
Trade issues continue to be a major
concern for traders with tariff levels on Chinese and Mexican products
adding tension to trade relations of two major pork-buying countries.
This is causing uncertainty short term in the pork complex, despite any
long-term benefits that may develop.
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| #completeherdhealth |
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