Limited cash cattle trade developed late last week with prices holding a wide range, but mostly around $110 live and $175 dressed. This is as much as $5 per cwt higher than the previous week based on the aggressive surge higher in futures trade Friday. October futures hit daily limits, pushing prices to nearly $114 per cwt as traders continue to focus on breaking out of the long standing sideways trend seen through the summer months. Futures are expected to remain mixed with a combination of position taking and follow-through buying developing in the opening minutes of trade. This could set the tone for the market over the next couple of days. Expect early trade to remain light, although the higher move last week should spark some additional long-term market support.
Lean hog futures activity is expected to remain firm, but the overall focus on outside market shifts and the potential to maintain narrow trading ranges over the next few days has limited aggressive activity through the entire complex. Additional market direction is expected through the entire complex following firm market support in nearby contracts. Cash hog values are expected steady to $1 higher with packers starting to focus on potential long-term supplies heading through the end of the year. Plant runs are expected at 440,000 head through the day Monday.
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| 1) |
Sharp limit gains in live cattle futures has helped to spark additional momentum in the complex. This will allow for the opportunity of expanded trading limits through the entire live cattle complex Monday.
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Despite sharp gains, there continues to be uncertainty about the ability to strengthen overall beef values, as beef cutouts have struggled to keep pace with recent market support.
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| 2) |
Live cattle futures have broken out of the sideways market trend since early spring. This is adding additional buyer support to the complex.
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The commercially led gains in nearby contracts have been unable to spark active interest through deferred contracts. This may limit long-term support in most 2019 contract months.
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There is moderate spillover support from live cattle futures into the hog complex. This is helping to draw additional price support in nearby contracts.
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Following the sharp rally seen in early September, buyer support in lean hog futures has stalled out and is hovering in a narrow range near the top of these levels. This could lead to additional volatility in the near future.
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Pork cutout values continue to firm through the month of September with domestic movement of pork remaining strong following the Labor Day holiday.
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Long-term impacts of Hurricane Florence has not yet fully been assessed to the hog industry in North Carolina and through the East Coast. This may take days to weeks in order to fully understand what short- and long-term impact this will have on the industry as a whole.
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