Cash cattle activity is expected to remain extremely sluggish through the morning with bids and asking prices yet to be established. At this point, it is likely to be midweek before any definition is seen from either side with active cash cattle trade potentially pushed into Friday once again. Live cattle futures are expected mixed to moderately lower, although the firm support in spring contracts over the last couple of trading sessions is likely to bring some market stability to the complex. February and April contracts inched higher Monday, setting contract highs, allowing many traders to see if follow through buying will support in the opening minutes of trade.
Initial futures trade is expected to remain generally weak with spill over selling activity expected to attempt to develop through the morning. A combination of short covering is likely to step into the market during the first couple hours of trade, after volume increases slightly. At this point, it is still uncertain just how much support traders will have to bounce prices higher, given the still strong supply outlook seen through the complex and growing uncertainty about summer demand. This will likely continue to erode summer premiums, but most contracts are expected to still remain range bound over the next few trading sessions. Cash bids are expected steady to $1 per cwt lower, with most bids steady to weak. Hog slaughter is expected to be seen at 475,000 head Tuesday.
| BULL SIDE | BEAR SIDE | ||
| 1) | February and April futures rebounded during early-week trade with trades pushing each contract to new contract highs. This is expected to help focus on continued underlying support through the entire complex. | 1) | Strong pressure in feeder cattle trade is led by front-month futures posting triple-digit losses Monday. This move lower, created additional underlying softness through the entire complex, bringing questions about current market sustainability. |
| 2) | Firm cash cattle gains last week will limit overall fundamental pressure through the complex, which is likely to lead to additional higher asking prices through the rest of the week. | 2) | Beef values continue to erode early in the week. This is creating additional underlying pressure through the entire complex after improved cash values last week. |
| 3) | Firming pork values Monday is expected to help add some needed stability to the entire lean hog complex. This may bring about additional commercial buying through the last half of the week. | 3) |
Summer lean hog futures trade continues to show the most aggressive market weakness. Traders are steadily chipping away at previously firm summer premiums as the focus through the complex moves to expected strong hog supplies through the rest of the year.
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| 4) | Continued strong packer margins have continued to allow packers to maximize plant speed. Even though supply levels remain aggressive, the desire to put additional pork into storage will likely limit cash market pressure through the end of the month. | 4) | Price pressure in cash markets is starting to add some increased overall pressure through the entire complex. Although the need for market ready hogs is likely to keep cash prices from moving sharply lower, the lack of continued spending is creating some yellow flags for traders. |
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| #completeherdhealth |
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