Cattle Weekly Comments May 3

Cattle Weekly Comments May 3

Cattle had a rough week this week. After trading with sharp losses, the first three sessions, cattle tried to dig out of the hole they worked themselves in. Most of the selling was tied to the Black Swan event created by the avian flu. Some of the pressure was due to heavier slaughter weights and limited cash trade. But most of those issues seemed to get resolved by the end of the week, which helped spur on the recovery.

Cattle opened the week with gains but waffled around during the first half of the session before selling pressure emerged, pushing cattle into the red by the close. Early support came from last week’s stronger cash trade which took place between $184 and $186, $2 higher from the previous week. Feeder cattle were supported by the lackluster grain complex. But economic concerns took hold late in the session and pulled cattle lower. The Federal Reserve will hold their regular meeting starting Tuesday and Wednesday, and although no change is expected in interest rates, traders are a little on edge as to the tone the Fed might take after the meeting.

Heavy selling pressure gripped the cattle markets on Tuesday with early selling tied to concerns about the Federal Reserve meeting. Traders are not concerned about the interest rate announcement but with Powell’s comments after the announcement. Light selling was also tied to the gift that just keeps on giving, avian flu. This time the selling pressure was tied to reports that the government is going to be testing ground beef at retail stores in the states with confirmed cases.

Buying emerged early midweek as cattle opened the session with gains and tried to rally from technical buying as traders tried to recover some of Tuesday’s losses. Light support was due to expectations for a steady cash trade. But the gains were short-lived due to the lack of a cash trade. Concerns as to how the Federal Reserve press conference will go added selling. The expectations that beef demand will start to decline due to the government’s plan to start testing ground beef in the states with confirmed avian flu cases added pressure. At this point, any report of contamination would be devastating to the beef complex especially ahead of the start of the BBQ season.

Gains finally showed up in the cattle market as both cattle contracts gapped higher on the opening bell, rallied to post strong triple digit gains, but then retreated to end the session close to where the market opened. The government reported all of the products tested came back negative for the avian flu. A light cash trade did develop at $186, $1 higher than last week, but volume traded was light. Last week’s export sales pace for beef was 22,468 MT. Gains were trimmed by the recent increase in slaughter weights due to packers slowing down chain speeds. Tight supplies help support feeder cattle.

For the week, June live cattle closed at $176.675 down $1.90. May feeder cattle were at $243.30 down $5.40.

For the month, April live cattle was unchanged while June live cattle closed down $5.275. May feeder cattle were down $4.125.