Cash-cattle activity is expected to remain limited with packers and feeders moving back to the normal Monday routine. It is expected to be even more limited given that we are in a fresh month and quarter, with little cash market direction likely until the middle to end of the week. Some additional longer-term support could redevelop as the firm futures gains late last week has created the expectation that additional buyer interest may develop through the coming days and weeks.
Cash hog prices continue to firm, but are deviating from the wider market shifts in the last three weeks. Prices are generally expected to be $1 per cwt higher as packers continue to look for market ready hogs in order to fill their growing market procurement appetite. This is expected to push most bids $1 per cwt higher with an estimated 470,000 head moving through plants Monday. Futures trade is expected to remain generally firm following the triple-digit gains at the end of last month. But the aggressive triple-digit gains will also likely bring about some desire to cover positions, leading to the potential for mixed trade late in the morning.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Strong underlying futures market support in nearby live cattle futures has sparked additional commercial buyer interest. December futures have rallied to the highest level in nearly a year, at $118.85 per cwt.
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Despite the strong gains across live cattle and feeder cattle support in the recent days, cash cattle markets seem to be stuck in a narrow sideways trading range through the end of September, creating concerns of longer-term fundamental support.
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| 2) |
The potential to spark additional buyer support during early October is creating the ability to set contract highs in several nearby live cattle contracts. This could stimulate additional buyer support over the near future.
| 2) |
Despite the moderate buyer support in cattle markets, the feeder cattle futures still remain stuck in a narrow-to-moderate range under the glass ceiling set in early September. With resistance levels seen at $159 per cwt in nearby contracts, it has been a challenge for traders to come close to breaking through these levels.
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| 3) |
Sharp triple-digit gains have continued to move through lean hog trade. This is rekindling the potential to break through short-term resistance in all nearby contract months.
| 3) |
Sharp end-of-the-month gains in lean hog futures is expected to add some additional volatility to the lean hog complex over the next few weeks. With traders becoming more comfortable creating a wider range at these price levels, market prices have the potential to swing higher and longer through early October.
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| 4) |
Continued strong buyer support in cash hog trade has helped to bring about even more trade activity. This may help to push cash prices even higher during early October.
| 4) |
Despite strong procurement levels and the desire to move product into cold storage, there is concern about building increased demand markets for pork and pork products through the upcoming months. This may limit long-term support if overall production levels continue to show growth.
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