With cash cattle trade settling steady to $1 per cwt lower at the end of last week, packers and feedlot managers will quickly go back to work collecting inventory levels and new showlists, in an attempt to spark additional direction after a stagnant month of January. At this point, little direction is expected through the first half of the week, as the majority of trade is likely to remain quiet until Thursday or Friday. Live cattle futures are expected mixed with limited volume early Monday as a combination of spillover buying and position-taking is expected to develop and potentially set the tone for limited activity through the end of the month.
Cash hog trade is expected to remain sluggish through most of the morning with bids steady to $1 per cwt lower. The concern of firm fundamental and technical pressure is adding to the weak cash market moves, and could add to overall weaker bids. Most bids are expected to be 50 cents per cwt lower as packers start the week and set the tone for the last week of January. Futures trade is expected to remain under pressure with the generally bearish tone holding across the complex. Some buyer activity is expected in order to cover short positions, but it is uncertain at this time if there will be enough critical mass to offset the weaker market structure. Slaughter runs at the plant are likely to hit 477,000 head Monday.
| BULL SIDE | BEAR SIDE |
| 1) Firm underlying buyer support is holding in nearby live cattle trade going into the week following the potential to erode previous price support from the last couple of weeks. This could help to sustain commercial buyer activity through the end of the month. | 1) Strong end-of-the-week losses redeveloped in feeder cattle trade. This clearly endangered the potential for unchallenged market support moving back into the cattle complex at the end of the month. |
| 2)Aggressive support will continue in the stock market through the month of January. Dow Jones Index has rallied 4,000 points in the last month as the index is flirting with 25,000 points for the first time since early December. And the start of the recent aggressive market slide. This could spark additional underlying support in all commodity markets. |
2) Cash cattle values have been unable to show any significant support during early 2019. This is expected to limit packer spending through the end of the month as long as cattle remain available for daily needs.
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| 3)The passage of a temporary budget and reopening the partially shuttered government allows for USDA to be fully open Monday for the first time in over a month. This may give some additional direction to recent meat product moves as reports are to be reinstated. | 3) Continued pressure in pork cutout values in the last two weeks have eroded packer margins from the early-month levels. This is expected to add even more pressure to cash trade activity as packers start to manage margins tighter going into the month of February. |
| 4) Pork cutout values bounced higher for the first time all week Friday. Despite the recent pressure, this could help spark additional longer-term support in the coming weeks. | 4) Recent sharp losses in lean hog futures trade has quickly eroded recent market support, with nearby contracts quickly moving through the November short-term support levels, and trading at the lowest levels since last August. |
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| #completecalfcare |
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