Light-to-moderate trade activity is expected to
redevelop early Wednesday morning in all live cattle and feeder cattle
futures. The mixed moves early in the week helped to draw some
additional follow-through support to nearby contracts. Deferred
contracts have limited market direction and a growing uncertainty as to
just how strong the buyer support will be over the near future. Some
additional longer-term activity is likely, which may help bring
additional support back to the table. Cash cattle trade is undeveloped.
This may improve through the day, but active trade is still expected to
be pushed off until sometime Thursday or Friday.
Strong market support is quickly developing
across the lean hog futures trade, which continues to draw increased
overall activity through the complex. There is growing support through
the market, which may continue to help spark follow-through activity
during the next couple of days. Even though there is the uncertainty of
long-term aggressive support developing in the hog complex, the severely
oversold market has caused traders to become more active through the
last half of February. Cash hog prices are expected to remain in the
same range as seen earlier with most bids expected steady to $1 per cwt
lower. Daily procurement levels are targeted at 465,000 head Wednesday
with an estimated 102,000 head on Saturday.
| BULL SIDE | BEAR SIDE | ||
| 1) | Bullish expectations of cattle feeders following the market rally last week is keeping any expectations of steady markets at bay by feedlot managers. This will keep asking prices firm through most of the week. | 1) | The inability to spark follow-through buyer support in deferred cattle trade is expected to draw additional longer-term pressure on the cattle complex. This may add even more uncertainty through early trade Wednesday. |
| 2) | Early estimates for the upcoming Cattle on Feed report is focusing on a strong movement in cattle marketed through the month of January. Initial expectations are pegging marketings near 106%. | 2) | Early estimates of total cattle on feed numbers for the month of January are pegged near 107%. This may add even more uncertainty to the complex as the reality of increased cattle numbers in the pipeline may continue to weigh on the overall long-term direction of the market. |
| 3) | Strong upward movement in lean hog futures Tuesday helped to post triple-digit gains in all nearby contracts. This is expected to help spark additional buyer interest through the near future as traders try to move off of recent market lows. | 3) | Cash hog prices continue to be unable to move significantly higher over the last couple of weeks, focusing on the additional and strong uncertainty through the rest of the complex. There is growing interest through the complex as packers remain focused on current margins. |
| 4) | Pork values have quickly bounced higher through the early part of the week. This support in all primal values is not only focusing on the strength in futures trade, but indicating that overall pork movement is also remaining firm. | 4) | Despite the one-day rally in lean hog futures Tuesday, the overall tone of the complex remains weak given that prices still remain near the bottom end of the trading range, limited confidence is seen that will continue to market support over the long term. |
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