Sharp losses in feeder cattle and lean hog futures led to concerns of renewed market pressure. Cattle on Feed report estimates that point to sharp placement and on-feed growth during April also created concerns.
Firm pressure developed in the live cattle trade late Tuesday. Futures closed $0.20 to $0.50 lower. The live cattle market was the most stable livestock market Tuesday, but that's not saying much when both feeder cattle and lean hogs saw triple-digit losses. Cattle on Feed report estimates being circulated Tuesday predict a bearish on-feed number in Friday's report, but expected demand strength helped limit losses in futures. Softness is still likely in live cattle futures if pressure continues in feeder cattle. But with markets in the current range, the downside potential of live cattle futures is limited due to expected demand and potential buyers willing to re-own positions at these levels. Beef cut-outs were unavailable at the time these comments were posted.
WEDNESDAY'S CASH CATTLE CALL:
Steady. Sluggish activity is expected early Wednesday following bids and asking prices remaining undeveloped at this point. Packers are expected to show limited interest Wednesday, but this could allow for limited trade midweek given the trend in the South over the last several weeks.
Active selling pushed most feeder cattle futures contracts triple digits lower. The full range of closes was $1.77 lower to $0.22 higher. Traders continued to liquidate positions Tuesday. The August contract closed $1.77 per cwt lower, down $2.50 so far this week on rising corn futures and expectations that growing supplies will add increased liquidation during late May. Early estimates for Friday's Cattle on Feed report put April cattle placements at 114% of last year's level. Even though 2018 posted lighter placements in the May report, the expected increase of cattle moving into feedlots would become burdensome to the market. CME cash feeder index for 5/20 is $132.17, down $0.65.