General Comments:
Activity levels in the cash cattle market are expected to remain sluggish Tuesday following the holiday weekend. Initial showlist distribution and inventory taking is likely Tuesday morning, but at this point, bids and asking prices are likely to be pushed off until midweek or later. The focus on cash trade last week will now move to the morning mandatory report in order to determine final numbers sold last week and overall average prices. Last week's cash trade developed through most of the week with wide price ranges seen once again. This makes it very hard to estimate the overall average price paid for cattle until final numbers are released. Traders will have the first chance to trade the May Cattle on Feed report Tuesday morning, which could leave markets generally unsettled. Although significantly lower levels were seen from year-ago results in all three categories, the report deviated little from pre-report estimates. This lack of change from market expectations could minimize the overall impact on price levels during morning trade as these reductions have likely already been factored into the market. Traders are also looking for more concrete meat demand news over the weekend. Given that some food service businesses are opening up, and retail demand remains strong for beef products, the focus on regaining consumer movement of beef, even at higher prices will be closely followed in the coming days and weeks. Tuesday slaughter is expected at 103,000 head.
Mixed trade is expected early Tuesday morning on uncertainty about how traders will respond to the long holiday weekend and late week pressure in the complex before the long weekend. Packing plants continue to slowly but steadily increase overall numbers of hogs moving through the system, which is expected to help minimize the backup of market-ready hogs, but the higher meat values at retail locations could still limit overall widespread gains in consumer demand through the upcoming weeks. There is more focus on recovery efforts in the food service industry, but given continued restrictions in many areas, and the economic pains brought about by the surging unemployment levels, it may be a very slow and gradual road to recovery for many restaurants. Technically, lean hog futures continue to hold within the sideways trading pattern with spot June futures over $15 per cwt above support levels, but nearly $7 below recent resistance levels. It will likely take a significant and abrupt change in overall market direction to break prices out of this current pattern. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids steady to 50 cents higher. Slaughter Tuesday is expected at 403,000 head.
| BULL SIDE | BEAR SIDE | ||
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A total of 1.43 million feeder cattle were placed in feedlots during April. This is 78% of year-ago levels, indicating significantly reduced placements which were expected, but will significantly tighten the long-term supply outlook for cattle through the end of the year.
| 1) |
Significant reductions in cattle marketed from feedlots was no surprise in Friday's report. But with only 76% of year-ago levels sold, the focus once again shifts to the increased age and condition of cattle in feedlots around the nation and how this will impact quality and production levels in the coming weeks and months.
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| 2) |
Cash cattle trade last week traded as high as $190 per cwt dressed and $120 per cwt live basis. Although given the wide trading range through the week, it is uncertain the overall weekly average price at this point, but the focus of renewed buyer support is building increased momentum in cash market support despite the backlog of market-ready cattle needing to be shipped to processors.
| 2) |
Limited trade volume surrounding the holiday weekend could leave traders generally sluggish through the early part of the week. This may limit the impact on overall inventory or beef demand in the near future as traders focus on outside market positioning.
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Growing expectations of demand support for pork products through the early summer months continue to focus on the ability to bring additional, but limited buying support back into the complex.
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Late week pressure in cash hog prices and wholesale pork values could limit price support during early week trade. This focus may continue to spark uncertainty in lean hog futures due to expected sluggish trade volumes Tuesday.
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Slow but steady growth in hog processing speeds is expected to continue through the end of the month. Although it may be a long time until pork plants see daily hog runs near pre-covid levels, the ability to show steady improvement is creating underlying market support.
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Continued back and forth bickering between the U.S and China on multiple issues continues to add concern about the ability to instill and increase overall pork exports to China over the coming weeks. Although overall pork imports by China have seen significant increases, the ability for the U.S to get a significantly larger market share of these imports has been limited at best.
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| #completeherdhealth |
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