Light trade activity is expected to be seen early Friday morning, although the tone of the market continues to be focused on the previous market pullback that may add even more softness to trade through the morning. There is also expected to be some pre-report positioning ahead of the cattle on feed report in both live cattle and feeder cattle trade. Cash markets appear to be well established with prices steady to $2 per cwt lower. It appears that more cattle will likely still need to be sold given the trickle of trade over the last few days. But unless something major is seen across the complex or in the cattle on feed report, prices appear to be set.
Additional buyer support is expected to be seen early in the session Friday, although the recent rally is expected to create some additional market adjustments with traders looking for increased market activity and the $3 per cwt market rally over the last couple of days. Cash hog prices are still expected to remain steady to weak with bids likely to be seen anywhere from steady to $1 per cwt lower through the morning. The rally in the futures trade has still not created a significant shift in packer spending as packers are still trying to control spending following previous margin pressure. Daily procurement levels are targeted at 451,000 head Friday with an estimated 134,000 head on Saturday.
| BULL SIDE | BEAR SIDE | ||
| 1) | Light buying support moving into deferred live cattle futures trade Thursday helped to bring about a sense of stability in the market. This is likely to help create some additional price support and buying momentum at the end of the week. | 1) | The pullback off of 2018 highs through the week in live cattle futures has created additional market pressure that is continuing to cause longer-term questions about just how much buyer support remains in the complex. With triple-digit losses seen once again in February contracts, the entire complex remains generally weak. |
| 2) | Expected increases in cattle marketed in January on the upcoming cattle on feed report is expected to help support overall demand expectations not only short term, but through the upcoming spring and summer months. | 2) | Increased cattle on feed numbers in the upcoming report which will be released Friday afternoon is expected. The current projection is that overall cattle on feed levels will increase 7% over 2017 levels, accounting for not only increased cattle available to the market, but also a steady string of 11 straight months of feedlot growth. |
| 3) | Aggressive triple-digit rallies have changed the direction of the lean hog complex after testing long-term market lows over the last couple of weeks. This $3 rally in nearby contracts is helping to create expectations of additional long-term support. | 3) | Cash hog prices are still unable to inch higher due to the consistent pressure by packers to limit spending activity and try to improve margins. This could continue to erode overall cash markets through the week and widen the spread between futures trade. |
| 4) | Active packer movement through the week combined with moderate to strong weekend hog movements through plants continues to keep the supply chain well balanced and is limiting a backlog of hogs to build up due to the ability to aggressively move hogs and pork through the system. | 4) |
Pork values have been extremely slow to respond to the latest round of aggressive futures support. This is likely to help to draw additional activity into the market, but strong pork product increases may still not be able to develop.
|
No comments:
Post a Comment