Cash cattle interest remains undeveloped going
into the Wednesday trading session as packer interest is likely to
improve through the day, but business isn't expected until sometime
Thursday or Friday. Asking prices are generally undeveloped but a few
asking prices earlier in the week at $122 live and $190 dressed are
expected to remain in effect. This could give some definition to the
market through the next couple of days, although at this point, there
will likely be a wide gap in bids and asking prices once packers do show
interest. Firm follow-through buying is expected in feeder cattle trade
following the aggressive Tuesday rally. But this is likely to also
create the desire to square positions given the wide market shift in the
last two weeks. A market correction is likely to develop at some time
in the next two weeks, as traders take advantage of the $3 to $4 per
rally in the last few trading sessions. Live cattle markets are expected
mixed in sluggish direction following cash market uncertainty.
Early cash bids Wednesday are expected steady to
$1 per cwt lower with most bids expected to be steady to 50 cents per
cwt lower. The strong underlying pressure in futures trade Tuesday as
well as lack of support in cash markets early in the week is adding even
more softness to the underlying cash market trade. Packers continue to
remain confident that they can fill aggressive procurement needs without
having to dig deeper into their pockets and pay more for hogs at this
point. Futures trade is expected to show increased market pressure
following the strong triple-digit softness on Tuesday. Even though
overall strength in the market is limited, the potential for
short-covering to develop is growing, which could leave markets mixed in
a choppy early trading pattern. Total slaughter schedules for Wednesday
are expected to be around 477,000 head. Saturday runs are expected at
226,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Sharp triple-digit gains through
nearby feeder cattle futures has fueled additional market support
through the entire cattle complex. This is expected to spark
follow-through buyer activity.
|
1) |
Resistance levels in February
futures remain at $122.37 per cwt, set last week. This may limit
bringing additional buyers back into the complex and may hamper a move
higher through the end of the month.
|
| 2) |
Firm gains developing in cash cattle
trade last week is helping to spark follow-through momentum. This is
driving additional interest into potential asking prices, which have not
yet been fully established.
|
2) |
Limited support in beef values
through the week has continued to create concern that market
fundamentals may not follow the recent strong support in futures trade.
This could quickly erode support in the entire market.
|
| 3) |
Despite the pressure in cash and
futures trade, pork values continue to hold up well through early
December. Firm gains continue early in the week, based on active support
in most primal cuts.
|
3) |
February lean hog futures have
fallen over $2.50 per cwt in less than a week with traders focusing on
underlying pressure in the market and continued fundamental softness.
This may spark additional weakness in the next couple of trading
sessions.
|
| 4) |
Active buyer interest is developing
in deferred lean hog futures as July futures are holding a $30 per cwt
premium to front-month December contracts. The focus on stronger demand
through the upcoming year as well as more stable summer production
levels has focused on underlying market support long term.
|
4) |
Recent news stories that the White
House is planning on delaying the second round of farm aid payments on
the hopesfor a quick and strong market recovery with China will impact
pork producers who have seen prices fall due to trade issues.
|
 |
| #ccc |
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