Lack of market activity on both sides of the cash market is expected again through Wednesday morning. Although packer interest is expected to improve in the next couple of days, it is likely to be sometime Thursday or Friday before active trade is seen, but the focus on futures gains could boost asking prices significantly. Trade through the morning in live cattle and feeder cattle is expected to be a mixed bag with position-taking likely at opening bell, although the underlying firm tone in the market should allow for follow-through buying activity once the initial jitters settle out of the market.
Firm gains in cash trade are expected to continue midweek, with bids steady to $1.50 per cwt higher. Most bids are expected to be 50 cents per cwt higher following the continued buyer support from last week and expected additional strength developing in futures trade. Futures activity is likely to remain mixed for the first half of Wednesday. The choppy back and forth market direction during the week is limiting overall market direction, although prices seem to be slowly advancing, but it has been hard to sustain strong market growth across the complex. Continued uncertainty about trade negotiations is still limiting market interest. Hog slaughter is expected at 477,000 head Tuesday.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Sharp gains in spot month February futures have moved contracts to new highs. This has helped to rebuild overall buyer support through the entire complex.
| 1) |
Beef values continue to show little support through the first week of the year although strong market support is redeveloping in futures trade. Limited beef cutout support may derail continued market gains in the next few weeks.
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| 2) |
Triple-digit gains in nearby live cattle during early-week trade is likely to spark aggressive gains to asking prices. This should focus on higher cash cattle trade through the end of the week.
| 2) |
The sharp market rally in live cattle futures that pushed spot month contracts to contract highs may spark a market correction in the near future if there is no follow-through fundamental support.
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| 3) |
Continued steady but firm gains in cash hog values during early January is helping to create fundamental support through futures trade, helping to draw buyers into spot-month contracts.
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April contracts were unable to bring buyer support back to the table Tuesday. This creates concern that follow-through buying may be limited through the rest of the week.
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| 4) |
Nearby lean hog futures have slowly but steadily advanced through the last week. Although prices are not going anywhere fast, the current market gains may be much more sustainable long term than an aggressive short-term rally.
| 4) |
Pork cutout values eroded Tuesday afternoon. This comes following moderate losses in most primal cuts. Although this is far from aggressive warning signs, the concern is growing that the additional pork procurement levels may weigh heavily on pork values through the spring.
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| #completecalfcare |
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