Cash cattle activity remains quiet following limited movement Monday. Packer interest may slowly develop, but active bids are not likely to become readily available until midweek or later. Asking prices are still hard to pin down, but firmness in futures trade early in the week could create additional optimism in feedyard managers as they focus on market stability through the middle of June. It appears there will be a push to get some cattle sold by midweek, especially in the South where this has become a more frequent trend the last couple of months. The strong upward shift in futures trade Monday quickly reversed market direction in live cattle and feeder cattle trade and is helping to rekindle buyer support in the entire complex. August live cattle futures led the complex higher with a $1.35 per cwt rally. Even with the current support, nearby live cattle futures remain well below short-term resistance levels, which may keep the cattle market hovering in the sideways trading range seen last month. A move above $109 per cwt in August futures would be needed to break out of the weaker market trend seen so far this summer.
Strong support quickly and aggressively moved into hog futures Monday morning as last week's strong pressure quickly ran out of steam. No major changes have developed fundamentally, but technical support is redeveloping as July futures bounced off support levels of $81 per cwt. The trend remains weak because a one-day market rally will not change the market trend. But the firm support in nearby contracts may spark follow-through buying activity as traders try to establish a market range around $83 per cwt. Traders continue to focus on potential export demand, but with no developments concerning trade deals with China, a dark cloud remains over pork exports. Cash trade is called steady to $1 lower Tuesday morning with most bids steady. Expected slaughter Tuesday is at 476,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Triple-digit gains in feeder cattle futures have sparked increased interest in the entire complex as traders continue to move prices above May support levels. With prices hovering in a wide $8 per cwt trading range, additional upside market potential may develop during late June.
| 1) | Limited support continues in beef values the last couple of weeks. This is creating additional underlying concerns in the entire cattle complex heading into the heart of summer. |
| 2) | Despite lack of short-term support in beef values, traders still focus on underlying demand growth through the beef complex. The potential to expand export sales at current price levels is expected to create additional underlying gains through nearby trade. | 2) | Despite early-week futures support, cattle futures remain in a weaker market trend. The volatility in grain markets concerning planting progress and uncertain production levels will continue to limit upside market potential in live cattle and feeder cattle trade. |
| 3) |
Triple-digit gains in lean hog futures quickly broke away from three-month lows as traders focus on the oversold market status. This is expected to bring renewed support in nearby lean hog trade in the near future.
| 3) | After setting three-month lows late last week, the lean hog futures complex remains in a bearish market trend, needing several consecutive days to move prices higher to establish price support levels. This could keep the market volatile for most of June. |
| 4) |
World demand for pork remains strong following the demand for pork after African swine fever. Even if China buys needed pork supplies from other countries, the need to backfill pork supplies into other regions of the country should spark overall export demand in the coming months.
| 4) | Uncertainty surrounding future business with China will continue to limit upward market support in lean hog trade. Even though export sales may continue to develop to China, consistently large increases will be needed to push prices significantly higher. |
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