Cash cattle activity remains undeveloped early in the week as would be expected on a Tuesday morning. Showlists are mixed to generally smaller but not expected to be a significant factor in overall pricing factors through the week. Bids and offers have not yet been developed and may not be seen until either sometime late Tuesday or even sometime midweek with late-week trade not out of the question. The firm support in boxed beef values seen early in the week is helping to draw overall support through the complex, but not likely to create overall overwhelming support through the market. Futures are expected to remain mixed as traders continue to focus on the ability to look toward commercial support building across live cattle and feeder cattle contracts through the complex.
Continued full packer schedules are the focus through the week with an expected 460,000 head being scheduled at plants early Tuesday morning. Early-morning bids are expected to be steady to $1 per cwt higher with bids scattered through the range. Early schedules for Saturday runs are expected to start around 200,000 head, still firming a strong weekly run, barring any mechanical failure. Lean hog futures are expected to open mixed in a narrow range with light trade developing early in the session following the sluggish lack of direction Monday. The potential to move past the holiday-influenced, commodity-wide inactivity shifts seen early in the week could bring about widespread buying Tuesday morning and through the rest of the week.
| BULL SIDE | BEAR SIDE | ||
| 1) | Firm cash cattle trade seen late last week is helping to draw additional bullish market support back into the complex. The ability to bring additional buyer interest back into the market is likely to not only spark additional interest in cash market interest, but sustain potential follow-through gains through the middle of October. | 1) | Lack of interest developing in futures trade Monday is going to limit the ability to bring traders back to live cattle and feeder cattle trade early Tuesday morning. Limiting the potential to expand gains seen late last week. |
| 2) | Continued firm buyer support in boxed beef values through the week is likely to help draw additional interest into the entire cattle complex. This is expected to draw buyer support back into not only beef values, but live cattle futures trade through the session Tuesday. | 2) | Continued concerns surrounding growing cattle and beef supplies remain a constant underlying limit on buying activity as traders constantly measure just how much overall long-term supply may be already priced into the market. This could have an impact in the complex through the next couple of weeks. |
| 3) | Strong triple-digit gains quickly developed in butt, rib and belly primal markets Monday helping to push pork cutout values nearly $1 per cwt higher. This continued buyer support has helped to draw buyer support back into the complex through early October. | 3) | Cash hog prices have started to see limited upward movement once again over the last couple of days. This could once again quickly erode buyer support in nearby buyer support in futures trade, creating significant pressure similar to the downturn, which developed through the middle of September. |
| 4) | December lean hog futures continue to trade above $60 per cwt in the upper level of the trading range, but the question is whether these price ranges will hold through the next two weeks as traders look for additional fundamental support. | 4) | Significant price pressure continues to be seen in nearby lean hog futures trade. With October and December contracts holding a $6 to $8 per cwt discount to February contracts, traders focus on the lack of support for current supplies despite the ability to move pork and strong demand for product. The concern remains about the long-term ability to continue to move product at a rapid and steady pace. |
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