Cattle: Steady Futures: Mixed Live Equiv $145.75 +1.13*
Hogs: Steady to $1 Lower Futures: Lower Lean Equiv $90.97 +2.69**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Limited cash trade interest is expected early Wednesday morning following the holiday Monday delaying the schedule from both packers and feedyard managers. Bids and asking prices are still unavailable but likely to see some additional interest through the midweek trading day. The support in boxed beef values and stability in futures trade should give more momentum to asking prices steady to higher with feeders looking for steady money by the end of the week. With the trend over the last few weeks moving to Wednesday trade in the South, it is likely that an emphasis on getting at least some deals done before the end of the day will be seen, But it is uncertain if that will happen due to the holiday-shortened week. Futures trade is expected mixed with additional pressure likely to develop in feeder cattle trade based on continued support in corn markets. Sharp double-digit gains are seen in corn and soybean markets in overnight trade following another bullish crop progress report where planting progress is falling further behind. Corn planting is at the slowest pace in at least 39 years with only 58% of corn planted as of last week. This will continue to reshape the direction of cattle markets due to feed costs becoming even more uncertain.
Active pressure is expected to continue early Wednesday morning following technical pressure, which has developed in all nearby lean hog trade over the last week. Continued concerns surrounding the ability to expand export trade continues to spark uncertainty through the entire complex. This may add even more volatility through summer contracts as traders grapple with the potential that current production and domestic demand will not be able to sustain current market prices without help from export support. There is still uncertainty surrounding the potential to move pork to China even at higher prices and overall tariff levels holding. Traders are still holding out that a long-term deal will develop, but this continues to erode recent support in lean hog trade. Cash trade is called steady to $1 lower Wednesday morning with most bids generally steady. Expected slaughter Wednesday is at 466,000 head.
|BULL SIDE||BEAR SIDE|
|1)||Strong triple-digit gains in boxed beef values is pointing to renewed underlying support in beef values following the Memorial Day holiday. This is likely to help bring a sense of stability into live cattle prices through midweek.||1)||Double-digit gains in corn and soybean markets has caused aggressive production pressure in feeder cattle trade. This will reshape overall feed cost projections, and directly affect the amount paid for feeder cattle over the coming weeks and months.|
|2)||Despite sharply higher grain prices and tumbling feeder cattle markets, buyer support in live cattle futures has remained steady to firm through early-week trade. This is helping to rekindle noncommercial trader interest during late May.||2)||Corn planting is 58% completed as of the end of last week. This is the slowest planting rate seen in at least 39 years with many states already past the prevented planting date set by federal crop insurance. This lack of corn planting is expected to have a dramatic impact on long-term prices and feed costs.|
|3)||Aggressive triple-digit movement swiftly shifted pork cutout values higher with strong gains in most primals while belly cuts posted double-digit support ahead of seasonal market support focusing on bacon demand.||3)||Sharp triple-digit losses through the last two trading session has continued to aggressively break through support levels in nearby contracts. This market weakness is likely to add market liquidation through the entire complex.|
|4)||Long-term demand for pork continues to be seen in domestic and global markets, despite the trade uncertainty with China. Traders will continue to look for additional export sales developing in the export sales report late this week.||4)||Cash hog values continue to slowly but steadily erode through the week despite recent support in pork values. Packers are keeping their hand on the production throttle, limiting the amount of hogs needed to be purchased and overall output of pork. This is an attempt to rebuild packer margins through early summer.|
Rick Kment can be reached firstname.lastname@example.org
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