Limited activity is expected in cash cattle through the first half of the day with traders focusing on additional outside market shifts and the potential to push futures prices higher. Packer interest remains unavailable, but should start to improve in the next day. Asking prices are still hard to pin down with feeders focusing on the potential moves in futures trade, in order to not leave anything on the table at the end of the week. Futures trade is expected to remain generally firm with follow-through gains developing in nearby contracts as the recent support, which pushed contracts to new contract highs, is helping to add additional underlying buyer interest. Deferred contracts remain uncertain following the inability to sustain early Tuesday gains.
Mixed price shifts are likely at opening bell with increased focus on regaining market support in nearby contracts. The inability for lean hog futures to hold onto session highs Tuesday is causing a little concern to most traders as the focus is being placed on summer and fall contracts where pork supply levels are expected to remain aggressive, leaving questions if current prices will hold through the year. But the still-strong packer margins is allowing for nearby support to redevelop through the complex. Cash bids are expected steady to $1 per cwt higher, with most bids steady to 50 cents higher. Hog slaughter is expected at 475,000 head Wednesday. Saturday runs are expected at 180,000 head, but this could be impacted by weekend weather expected through the Midwest.
| BULL SIDE | BEAR SIDE |
| 1) Strong nearby gains early in the week is setting the tone for firm follow-through support across the complex. | 1) Despite strong nearby gains in live cattle futures, support is limited through deferred contracts, creating concerns about sustained beef demand. |
| 2) Strength in beef cutout values is showing increased improvement through the entire cattle complex, allowing for wholesale cuts to follow recent gains in cash and futures trade. | 2) Limited interest in cash cattle trade midweek and the lack of consistent market shifts early in the week could limit higher cash prices through the end of the week. |
| 3) Firm gains in nearby lean hog futures has offset previous market pressure. This is sparking renewed commercial buyer support through spring contract months. | 3) Weaker pork cutout values have caused some moderate uncertainty through the entire complex. Even though packer margins continue to remain strong, the inability to move pork product at higher prices will quickly derail any sense of market support. |
| 4) Firm price premiums continue to hold in summer contracts, allowing for additional focus on long-term demand support as traders remain optimistic that trade situations will be resolved in the coming weeks and months. | 4) Summer lean hog futures remain steady to weak through midweek as concerns of strong and growing pork and hog supplies are starting to add even more uncertainty to traders. This may continue to add softness in late 2019 contract months. |
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| #completecalfcare |
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