DTN Early Word Opening Livestock 05/24 06:33
Limited Livestock Trade Expected Friday
Market interest is expected to remain extremely sluggish Friday ahead of the
three-day holiday weekend. Mixed trade is expected early in the session with
cattle traders attempting to adjust to the upcoming cattle on feed report.
By Rick Kment
Cattle: Steady to $2 Lower Futures: Mixed Live Equiv $143.79 +053*
Hogs: Steady Futures: Mixed Lean Equiv $87.63 -2.21**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Following moderate trade over the last two days, cash cattle markets appear
to be essentially done for the week. Although the potential for some clean up
trade may develop, the tone of the market is expected to be set with prices at
$114 to $116 live and $184 to $185 dressed. Generally cash prices for the week
were steady to $2 per cwt lower depending on the area of the country and
delivery terms for cattle sold. Futures trade is expected mixed as traders
adjust to outside markets early Friday but quickly turn attention to the
upcoming cattle on feed report where pre-report expectations point to a strong
shift higher in overall cattle in feedyards as well as increased placement
levels. If the report is anywhere near the early estimates, a bearish tone is
expected to hover through the complex. A portion of this bearishness has
already been worked through market prices, but increased volatility early next
week may quickly develop.
Narrowly mixed trade is expected early Friday with limited new information
available for the hog complex to trade at the end of the week. The underlying
concerns surrounding the trade war with China is being countered by overall
global demand for pork in the wake of African swine fever. This will continue
to be the plot of the lean hog complex over the near future with very little
additional information on either issue available in order that traders can put
specific numbers too. This will become a challenge through most of the summer
as the anticipated target will continue to steadily move day-to-day, and will
likely keep markets swinging from one direction to another. The fact that China
was back in the market last week buying pork, is encouraging, although given
the overall history or China sales, until the product is shipped, it should not
give traders too much confidence. Cash trade is called steady to $1 lower
Friday morning with bids scattered through the range. Expected slaughter Friday
is at 458,000 head. Saturday runs are expected at 43,000 head.
BULL SIDE BEAR SIDE
1) The upcoming Memorial Day holiday 1) Growing concerns of expanding cattle
weekend is expected to spark supplies ahead of the cattle on feed
additional buyer support and focus report is likely to cause market
on demand strength through the pressure as traders adjust to
complex. potential cattle placement levels.
2) The ability to hold short-term 2) The long holiday weekend may create
support levels of $109.50 per cwt additional pressure Friday with
in June futures is helping to limited trade volume expected through
create additional technical the end of the week, as well as
interest through the entire traders having to hold any cold
complex. storage report data until Tuesday when
markets reopen following the holiday
break. This may add a bearish tone to
the complex next week.
3) Strong cash hog support late 3) Sharp losses in pork cutout values
Thursday helped to regain overall once again focus on wide primal market
market confidence that tighter shifts and the concern that summer
market ready hog supplies are seen domestic demand is being hampered by
at the end of the week, pointing previous price support.
to additional further clearance
over the near future.
4) Active export sales to China in 4) The overall trade deal with China and
weekly export sales report is overall global economic concerns will
expected to continue to bring continue to hold a dark cloud over the
stability to the entire lean hog hog complex as traders remain
complex over the near future. This uncertain of a timeline of even
may help spark additional direction that the market will take
underlying support through the before any resolution is seen.
Rick Kment can be reached email@example.com
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