Cash cattle markets are expected to remain limited as feedlot managers focus all of their attention on keeping animals fed and healthy through the extreme weather conditions. Asking prices are likely to redevelop at $125 and higher live and $200 to $203 dressed. It might be Thursday or Friday before there is any active trade, and it could be Thursday before any bids develop. Futures trade is expected to be steady to firm through the morning with traders focusing on the weather impact on herd and animal health at a minimum. Limited weight gains will be seen in the next few days, and there is increased potential for death loss in cow herds and feedlots. Because the extreme cold snap is expected to be generally short-lived, this may not have a significant market impact, but it will likely shift market activity.
Cash hog bids are expected to remain steady to $1 per cwt lower given the pressure in the complex. Although the limited amount of hogs moving to market Wednesday will likely keep prices near the steady mark, with firmer cash markets potentially developing later in the day. Futures trade is focusing on building additional stability after previous attempts by buyers to step back into the complex. At current price levels, markets remain oversold, with the potential to rebound through the next couple of weeks. But growing uncertainty remains about long-term demand given the expected supply growth through the summer months. Slaughter runs at the plant are likely to be reduced to 275,000 head Wednesday with Saturday runs increasing to 350,000 head.
| BULL SIDE | BEAR SIDE |
| 1) April live cattle contracts have moved to contract highs once again, sparking increased underlying support through the entire live cattle complex. | 1) Extreme cold temperatures have the potential to turn deadly for both animals and humans across much of the Midwest. This will create increased challenges in all areas of cattle production and packer processing through the next couple of days. |
| 2)Boxed beef values bounced higher early in the week, creating the expectation that additional market gains may continue through the end of the month. |
2) Limited recent support developing in nearby feeder cattle contracts is causing some questions of follow-through support. Traders are closely monitoring feeder cattle direction, as recent gains could quickly erode.
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| 3)Limited plant runs are scheduled for Wednesday due to the danger of moving hogs by truck in some areas where temperatures are subzero and wind chills are 30 to 60 below. This should help to support cash values in order to coax as many hogs through plant doors as possible. | 3) Limited hogs moving to packing plants through the day is expected to limit movement due to the cold weather conditions. This will back up market ready hogs, potentially creating cash price pressure through the first week of February. |
| 4) The pullback in overall pork processed this week should support pork cutout values on a short-term basis. | 4) The extreme weather conditions create a shock for hogs moving to packing plants, much more than cattle. With confinement hogs spending their lives in climate-controlled conditions, the truck ride to processing plants is an extreme shock to their system. Not to mention the increased potential for breakdowns in trucks due to the weather along the way. |
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| #completecalfcare |
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