GENERAL COMMENTS: Moderate-to-strong pressure continued to develop Monday especially in lean hog futures. Initial support developed early Monday, following rolling to June, but then buyer support quickly eroded, allowing for additional selling pressure before the end of the session. Corn futures moved lower in light trade. July futures fell 2 3/4 cents per bushel. Dow Jones Index is 4 points higher with Nasdaq down 120 points. Light trade is reported in Kansas late Monday afternoon with sales at $113 per cwt. This is $2 per cwt lower than last week. At this point, the amount of cattle reported at this price is not enough to suggest a market trend, but the bearish shifts in fed cattle futures as well as general weakness in beef values are pointing to steady-to-lower prices. Showlists appear to be generally larger in all areas but Texas. Asking prices are still hard to pinpoint in many areas, but appear to be around $118 live and $188 dressed. National Daily Direct afternoon hog report is $0.39 lower with a weighted average of $76.27 per cwt. Full range of $69.00 to $78.00 per cwt on 7,905 head sold.
LIVE CATTLE: Additional pressure developed Monday ($0.10 to $1.70 lower). Moderate pressure noted in most live cattle trade Monday with most contracts hovering between 10 to 42 cents per cwt lower by the end of the session. The fact that buyer support was not able to hold following early gains is the biggest concern. Traders expected previous market losses would bring about early month short-covering and potentially spark some short-term support through the entire complex. But, with increased weakness through the entire complex, traders set new contract lows in August futures with prices falling to $102.80 per cwt. This move is testing August 2018 support levels with a move below $106.25 opening the door for additional underlying pressure. Beef cut-outs: lower, $0.82 lower (select, $206.87) and down $0.01 (choice, $223.20) with light demand and offerings, 112 loads (52 loads of choice cuts, 32 loads of select cuts, 6 loads of trimmings, 21 loads of coarse grinds).
TUESDAY'S CASH CATTLE CALL: Steady to $2 lower. Limited direction early in the week, but general weakness across the complex is limiting support. A few cattle were reported sold Monday, $2 per cwt lower, but most other trade is likely to be delayed until later in the week.
FEEDER CATTLE: Wide price swings left feeder cattle undirected and under pressure Monday ($2.15 lower to $0.37 higher). Limited buying slowly developed, allowing for increased uncertainty which led to contract lows late last week. The initial support moving through the complex Monday morning as traders entered the month of June trying to cover short positions and establish renewed interest through the complex quickly eroded following pressure in live cattle futures and limited volume. Feeder cattle futures have eroded any sense of premium in the complex with all contracts collected in a tight range during early June. Continued fear that aggressive corn market gains will develop over the near future following wet weather and planting delays is causing many traders to liquidate positions. CME cash feeder index for 5/31 is $133.05, up 0.58.
LEAN HOGS: Early support Monday quickly faded as active selling interest redeveloped ($0.15 to $2.15 lower). Any hope of a widespread market rally developing after the first of the month was quickly dashed as prices started to pull back from initial buyer support and continued lower through the session. Triple-digit losses were seen in all contracts except lightly traded June futures; most of the attention was placed on fall contracts falling over $2 per cwt. Current price levels are at the lowest level since mid-March with increased bearishness developing through the entire complex. Strong gains developed in pork cutouts following aggressive gains in rib and belly primals. Pork cutout values gained $2.23 per cwt, moving to $84.62 per cwt on 285 loads. CME cash lean index for 5/30 is $81.92, down 0.30. DTN Projected lean index for 5/31 is $81.28, down 0.64.
TUESDAY'S CASH HOG CALL: Steady to $2 lower. Firm pressure in lean hog futures is leaving cash markets generally unsupported as packers continue to balance plant margins with optimal plant speed. Most bids are expected to be steady to weak early Tuesday. Tuesday's slaughter is expected at 474,000 head.
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