Cash market activity is expected to remain silent with bids and asking prices undeveloped through most of the session. It is likely that trade will not develop until midweek or later as the potential for moderate to wide shifts in futures and beef values could keep both sides looking for additional direction. Showlists are mixed with gains in Nebraska offsetting reduced offerings in Kansas. Early futures trade is expected to remain mixed in limited trade. The late-day rally Monday, which helped to offset early pressure is likely to bring more volatility to the market than market stability.
Early cash market bids are expected to be steady to $1.50 per cwt lower with most bids likely to hit 50 cents per cwt lower. The overall lack of market support in cash values could change given the rally early in the week in pork values and futures trade. But more confirmation is needed to show traders are willing to continue to step back into the market following the previous market tumble in order to build confidence from most traders, and change the overall market direction. Total slaughter schedules for Tuesday are expected to be around 477,000 head. Saturday runs are expected at 232,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Active buyer interest quickly swept through live cattle futures late Monday. This seemed to be evident of active support changing direction following the limited market support through most of the session. This could quickly set a firmer tone through the rest of the week.
| 1) |
Sharp gains in grain trade will continue to cause underlying uncertainty from short- and long-term buyers, especially feeder cattle traders. With corn futures gaining 35 cents per bushel in the last month, more focus on feed costs will be seen in the near future.
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| 2) |
Despite strong gains in corn and soybean prices early in the week, aggressive buyer activity that moved through the feeder cattle market is shifting the focus from production costs to overall demand potential in the cattle complex. This shift in mentality could quickly regain market support in all cattle trade.
| 2) |
Lack of consistent buyer support in boxed beef activity early in the week is causing some underlying concerns that recent support may not carry through the rest of the cattle complex.
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| 3) |
Strong gains quickly developed in pork cutout values with most primal markets posting triple-digit gains. This helped to push pork values $1.46 per cwt higher to $81.50 per cwt as renewed support is moving back into the complex.
| 3) |
Aggressive price discounts in spot month lean hog futures continue to hold. December contracts are now trading $24 per cwt under summer 2019 contracts. This is likely to limit follow-through support in nearby trade.
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| 4) |
Sharp triple-digit gains flooded into lean hog futures trade Monday. This has helped to rekindle the expectation that commercial buyer support may redevelop over the near future.
| 4) |
Cash hog values continue to erode with packers finding adequate market ready hogs to fill needed procurement levels while still reducing overall cash hog prices. This could continue to weaken the complex due to available supply levels.
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| #completeherdhealth |
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