Early futures trade is expected to remain sluggish with overall lack of direction seen through the complex following the choppy back and forth movement over the last several days. The strong pressure in feeder cattle futures which developed Friday once again may add even more volatility to the market with prices likely to see additional market shifts over the next several days and weeks. Cash cattle trade did not develop until late Friday, with prices reported generally steady with last week. At this point, it appears that overall trade remained lighter than the previous week, but there will be more focus on the formulated sales numbers as they are reported on Monday. Any cash activity that is done Monday is expected to be reserved by show list distribution and inventory taking with bids and asking prices not expected to develop.
Follow-through pressure is expected to be seen in cash hog trade early Monday morning with most bids expected to be $1 to $2 per cwt lower following the weaker trend that has developed over the last couple of weeks. This is adding additional market pressure to the entire complex as futures trade is expected to remain moderately lower in most contracts. Continued focus on eroding pork values through the month of February is adding even more uncertainty to the entire complex.
| BULL SIDE | BEAR SIDE | ||
| 1) | The development of fully steady cash cattle trade in the late hours of activity last week once again places the emphasis on continued feedlot managers persistence and ability to bring additional focus to the still firm beef values. | 1) | Continued pressure in feeder cattle trade is causing additional weakness to the entire complex. This is adding to the overall pressure in the complex as traders may continue to see follow through selling early in the week. |
| 2) | Even though sales totals are still unavailable, the expectation early Monday morning is that packers will move into the week still short bought. This could not only help to initiate trade earlier in the week, but if continued firmness is seen from feeders, could help to elevate cash cattle prices through the week. | 2) | Continued widespread pressure in the stock markets continues to be closely monitored in the cattle trade. The Dow Jones Index posted a volatile week of wide shifts higher and lower through the week, but ended the week last week with a 2,000 point loss. This is expected to have a major impact in not only short-term direction, but the potential to sell beef on the domestic and export markets. |
| 3) | Lean hog futures have stabilized at the end of last week. Even though buyer support was unable to hold through the session and into closing bell, the ability to break away from the sharp market tumble seen during the first half of the month has created some positive buzz through the complex, which could draw additional buyer support back to the table. | 3) | Continued pressure in pork values has added to the market concerns through the last week. Pork belly markets have been the leader of the sharply falling market trend. This may continue to add even more weakness through the complex as traders remain concerned about the ability to sell pork following outside market shifts. |
| 4) | Summer premiums continue to hold through the hog complex as traders continue to focus on the potential of supply tightness as the year progresses and have not given up on continued strong pork demand through 2018. July futures are holding a $13 to $14 per cwt premium over the nearby April contracts over the last week, allowing additional focus on long-term direction. | 4) | The bearish tone continues to hold through the lean hog futures complex following a $5 per cwt market slide over the last week. It is uncertain if firm buyer support will be able to be redeveloped over the near future as traders are looking for increased stability to be seen through the entire market, although fundamental and technical pressure may continue to develop. |
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