Strong triple-digit losses in live cattle and feeder cattle futures Friday is adding increased concern to the complex Monday morning. Although short-term support remains intact at this point, the move lower late last week is creating concerns that follow-through pressure may develop in the middle of June, testing contract lows. Beef values have remained generally static with limited movement last week. Feeder cattle trade Friday led the entire complex lower with $2 per cwt losses across the market as traders remain concerned about follow-through pressure developing early in the week. The announcement that U.S. and Mexico reached a deal on immigration to avoid the impending tariffs will likely add light-to-moderate support Monday as a portion of Friday's pressure was based on the fear a deal wouldn't be made. Cash cattle trade is expected to remain sluggish Monday with bids and asking prices undeveloped and likely not to become extremely active until later in the week.
Limit losses on Friday will create additional volatility in the complex with expanded trading limits of $4.50 per cwt available through the session Monday. The fact that a deal with Mexico was announced late Friday should help bring underlying support to the complex. But mixed trade is expected Monday morning following increased spillover liquidation as well as short-covering. This may lead trade in a widely mixed range with traders focusing on upcoming trade levels as well as strong domestic pork supplies in the summer months. Cash trade is called steady to $1 lower Monday morning with most bids steady. Expected slaughter Monday is at 474,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | A late-week deal on immigration to avoid the impending tariffs that would've gone into place Monday is expected to regain market support following strong underlying pressure last week. | 1) | Boxed beef values were unable to show significant market support last week, allowing concerns of follow-through pressure in beef prices and demand uncertainty in futures and cash trade. |
| 2) |
Cattle packers are expected to enter the week short-bought following limited volume developing last week. This could stabilize cash cattle trade through the week following a strong but steady market slide the last few weeks.
| 2) |
Aggressive triple-digit losses in live cattle and feeder cattle trade late Friday sparked renewed underlying pressure in the entire complex. This is likely to add even more uncertainty in the entire market as nearby live cattle futures are testing contract lows once again during early-week trade.
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| 3) |
Avoiding the tariffs on Mexico by the Trump administration due to a late-week deal is expected to spark strong support through the lean hog futures Monday.
| 3) |
Limit losses in July and August futures have broken through short-term support once again as traders continue to search for meaningful buyer interest during early June. The shift lower continues to back away from March support as traders balance domestic production with global uncertainty.
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| 4) | Underlying global pork demand is expected to remain strong with traders focusing on the need to replace at least a portion of the production lost in Asia due to African swine fever, even though there has been less news about it in the last couple of weeks, the growing world demand continues. | 4) |
Lack of developments in the U.S. and China trade issues is keeping the pork complex under pressure as long-term direction may remain under pressure most of the summer. This may limit buyer support during early-week trade after sharp late-week losses.
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