Cash cattle trade broke out of its regular routine Monday with light trade in most areas of cattle country at lower money. The sharp losses early in the session, but a bounce in futures prices near midday seemed to create an opportunity for feeders to limit their losses, even though it took place early in the week. Live cash trade in the South ranged from $105 to $110 per cwt. This is generally steady to $5 per cwt lower with most sales $2 to $5 per cwt lower. Northern Dressed trade fell generally $5 per cwt to $170 per cwt during the limited morning trade. More cattle sales are expected, but at this point, it is uncertain if there will be a chance for additional stability in the complex. Boxed beef values posted record gains Monday with Choice cuts gaining $16.22 per cwt. The current market situation surrounding unknown long-term demand and panic buying keeping meat counters bare is adding to the wide market swings as the transportation and processing links of the meat market system continue to be the focal point moving forward. There are reports of empty store shelves, while significant restrictions have started to be put into place surrounding restaurant and bars closing and large (even small) gatherings halted. The short- and long-term impact on beef demand is not known at this time, but essentially shuttering many of the food service outlets will have a long-lasting impact on the overall demand for beef. Futures trade is expected to move swiftly lower once again despite the appearance that limited buying is starting to develop in other commodity markets. The meat complex can arguably be the most impacted of most major commodity markets by social distancing, and significant restrictions on the food service industry. Tuesday slaughter is expected near 119,000 head.
Lean hog futures will have access to expanded trading limits Tuesday even though April futures pulled well away from expanded limits Monday afternoon. The lightly traded May contract had little activity or open interest, but the close at $4.50 per cwt lower Monday was enough to expand trading limits once again. The overall uncertainty in short- and long-term direction of all meat markets continues to focus on the ability for retail store demand to make up for pork product lost in food service locations over the coming weeks. Pork cutout values rallied $3.54 per cwt Monday as the immediate demand to restock store shelves continues to be significant. The widening spread between futures and retail pork prices is the focus on uncertainty of maintaining this pace from a processing level and distribution level. Cash hog prices are called $1 lower to $1 higher with most bids expected steady to $1 lower. Slaughter Tuesday is expected at 491,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Beef cutout values surged higher, moving to record one day gains. Choice beef values more than doubled the previous record set on 8/12/19 of $7.74 with a $16.22 rally Monday. The immediate demand for processed product available to be put on store shelves remains intense, while looming questions of future beef demand exist.
| 1) | The expanding cavern developing between prices of cattle and beef continues to add frustration throughout the entire industry. This will continue to focus on uncertainty through the entire beef complex as short- and long-term demand for beef, and processing schedules are just a few of the questions on the ever expanding list of unknowns. |
| 2) | Firm overnight buying in most commodity markets and a bounce higher in stock market futures is pointing to the potential of market stability Tuesday. | 2) | Expanded trading limits available in live cattle and feeder cattle markets Tuesday is adding additional concerns that the ability to move live cattle into market ready beef products could be the next upcoming challenge for the COVID-19-struck country. |
| 3) |
Sharp triple-digit gains have quickly developed through wholesale pork prices as it has been impossible to keep pork products, as well as other meat markets on store shelves. Continued active support will move current holdings of pork to retail levels quickly over the near future.
| 3) | Limit losses in May and June futures Monday and expanded limits available Tuesday may spark increased widespread liquidation through early week trade based on demand uncertainty of upcoming pork demand. |
| 4) | The expectation that China is getting back to a more normal schedule remains long-term bullish for the lean hog and pork complex. This may continue to help limit deferred market pressure through the lean hog complex. | 4) | Concerns that a COVID-19 outbreak within a packing plant could significantly disrupt the meat supply and availability to move market-ready hogs through the system is a legitimate concern. This will likely continue to keep prices under pressure early Monday morning. |
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| #completecalfcare |
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