General Comments:
It appears the cash cattle trade will follow the lead of the last few weeks with trade developing Monday afternoon, signifying the potential of light trade trickling in during the week. The large amount of negotiated trade last week could spark additional momentum this week. Even though price ranges at this point are not as wide as in the past few weeks, there still remains a $9 per cwt range in dressed cattle. It is likely that additional trade may develop the next few days, but it is going to be hard to pinpoint a market trend before the last half of the week, and if wide price ranges develop once again, it may be hard to know where the market average lands until early next week. Futures trade is expected to be mixed. The strong price pressure in choice and select beef cuts Monday once again puts the emphasis on the inability to sustain previously high levels. Even with the sharp losses over the last few weeks, wholesale beef values are still trading well over $100 per cwt higher than seen in mid-April before the price surge started. As meat production moves back to a more normal level, it is likely that swift changes in wholesale values will continue to develop. The recent surge in retail beef levels is making local and national news, which has the potential to create bearish demand changes from consumers who are likely hit by "sticker shock" with ground beef prices at the same price and higher than they had traditionally paid for steak and roasts. Tuesday slaughter is expected at 115,000 head.
Widespread losses have continued to develop in all sectors of the hog market during early week trade, leaving concerns for further market pressure to develop as the week continues. June futures are still leading the complex lower with traders focusing on the large amount of market-ready hogs available to the market as production plants continue to ramp up processing levels and overall output of pork. Given the continued uncertainty with China and surging retail pork prices over the last three weeks, it is uncertain just how much overall pork will be moved through the system. This could quickly rebuild storage levels of pork, creating additional long-term pressure in the complex. Although spot lean hog futures are still holding to the sideways pattern seen the last two months, and hovering near the $55 per cwt price level. June futures have fallen nearly $11 per cwt from May highs as traders struggle to find short-term support levels, which could mean further losses. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids steady to $1 lower. Slaughter Tuesday is expected at 428,000 head.
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Active negotiated cash cattle trade has continued to develop each of the last few weeks. With increased buying developing, there continues to be growing focus on the potential to develop cash cattle trade each day during the week.
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Sharp losses developed in boxed beef prices Monday. This is leaving uncertainty as to where retail prices will land in the coming days and weeks. Although most agree that prices this high are unsustainable, the question of how far will they move lower is still unable to be answered.
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Strong underlying price support in deferred live cattle and feeder cattle futures late Monday helped to break away from the early week pressure, which was feared. The focus on long-term supply tightness in the market is expected to help sustain buying through the end of the year and early 2021.
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Firm pressure in spot live cattle futures have moved futures prices below the $100 per cwt once again. The inability for nearby contracts to hold this threshold price level is likely to add increased market pressure in the coming days.
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Growing demand expectations for pork through the early summer months is expected to help bring some much needed stability to the market. This may not be seen as much in price support as overall product movement through domestic and export channels.
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Sharp losses in cash hog and pork cutout values early in the week has led to additional market weakness. This added uncertainty through the entire complex and could add increased pressure in the coming days.
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Lean hog futures continue to remain in the top half of the trading range established over the past two months. The ability to sustain prices at or near $55 per cwt in nearby contract months is expected to spark increased buyer support during early June.
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Triple-digit losses on the first day of June is creating concern that further market losses may develop in the near future. Concerns of export trade volume surrounding China tensions could a further weakness to the market.
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| #completecalfcare |
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