by Dennis Smith
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Cash is called steady to lower as packers grumble about lost margins. Weekly pork export sales were 16,100 MT, down 59% from the 4-week average. Mexico was our largest buyer with China not in the market last week. However, shipments were good, at 26,400 MT, they were up 11% from last week and up 2% from the 4-week average. We shipped 6,800 MT to Mexico and 4,400 MT to China. Shipments are more important than the sale figures as sales commitments are already huge. Its large increases in shipments, going into the summer months that will tighten supplies dramatically. In the wake of the trade negotiations in Beijing the market quickly concluded that Chinese tariffs on U.S. pork will disappear rather quickly. This was the driving force yesterday and will continue to support the market today. Overnight China banned Canadian pork shipments from two firms. Canada is learning that you don’t tick-off the big dog without paying a dear price. This is not a big deal for the market. As Canadian pork eases down Mexico will step in. They can purchase Canadian pork tariff free versus a 25% tariff on U.S. pork. We’re on expanded limits today. Volume yesterday was 65,800 and open interest increased by nearly 2,800. Look for upside follow through today.
Cash cattle prices continue to trade at lower levels with prices established early this week at 122-123 and from 198-201 in the meat. These prices are lower than the previous week. Weekly beef export sales were very poor at 10,600 MT, down 50% from the 4-week average. Shipments were not good either at 11,700 MT, down 18%. Fund liquidation seems to have stabilized with open interest yesterday down only 400 cars on volume of 69,600. Trump is reporting progress in bi-lateral trade talks with Japan which would be a big positive for cattle. In addition, I’m wondering out loud if the Chinese may possibly open up the U.S. beef market. This would be a major surprise and a major positive development for cattle prices. Other than waiting for a major recovery we have no recommendations in cattle.
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The risk of loss in trading futures and options on futures can be substantial. The author does not guarantee the accuracy of the above information, although it is believed that the sources are reliable and the information accurate. The author assumes no liability or responsibility for direct or indirect, special, consequential or incidental damages or for any other damages relating or arising out of any action taken as a result of any information or advice contained in this commentary. The author disclaims any express or implied liability or responsibility for any action taken, which is solely at the liability and responsibility of the user. In addition, the author of this piece currently trades for his own account and may have financial interest in the following derivative products: (corn, soybeans, soybean meal, soybean oil, lean hogs, live cattle, feeder cattle).
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