Cash cattle activity started to develop through the northern part of cattle country Thursday. Some additional volume is expected in these areas, although the price trend may be set. Dressed prices were seen at $175 per cwt, which is generally $1 higher than last week. Southern trade still remains sluggish, so we should see additional interest developing through the day. Bids are expected to redevelop in the same range as Thursday, around $108 to $109 per cwt. Futures trade is expected to remain mixed following the general pressure over the last couple of trading sessions. This may add some additional volatility to the complex with end-of-the-week positioning being done.
Little is expected to change in cash hog markets early Friday from the last few trading days. Bids are expected to be steady to $1 per cwt lower, although most bids are likely to be steady to weak. Plant runs are likely to hit 470,000 through the end of the day, with an estimated of 182,000 head on Saturday. Futures trade is expected to open under further pressure, but the weakness in the market may have run out of gas over the last couple of trading days. This could allow for choppy market direction, and potential buyer support through the end of the day.
| BULL SIDE | BEAR SIDE | ||
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Firming support in cash cattle trade, which developed through the day Thursday, is helping to spark renewed optimism through the complex. .
| 1) |
Feeder cattle futures have led the cattle complex lower during the week with nearby contracts eroding $2 per cwt over the last couple of sessions. This is adding additional concern to the entire complex given the currently strong amount of cattle already in feedlots.
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| 2) |
Live cattle futures bucked the weaker trend during Thursday trade, with buyers firmly redeveloping in front-month October contracts. This could help to instill additional buyer support through the end of the week.
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Beef values have eroded in the last couple of days as short-term pressure is creating weakness to select and choice cuts.
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Cash hog prices continue to remain generally stable despite the aggressive $4 per cwt market slide in December lean hog futures. This is helping to retain the focus on short-term fundamentals.
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Sharp losses in December lean hog futures through the week has placed futures prices within 10 cents of breaking through short-term support levels set on Sept. 26. A break through this levels may spark some additional end-of-the-week softness through the entire complex.
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| 4) |
October lean hog futures have been resilient through the week while the rest of the livestock complex has tumbled lower. This has widened the price spread in October contracts to over $12 per cwt, allowing traders to focus on nearby buyer support.
| 4) |
Pressure seen in lean hog futures is expected to work through fundamental market factors through the upcoming days and weeks. This may erode cash market prices as well as pork cutout values during mid-October.
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