Cash cattle trade have once again made it to Friday morning with little interest or desire for packers and feedlot managers to meet in the middle. Even though packers remain short bought, it may be late in the day before deals are reached. Both sides seem entrenched in their position and unlikely to budge early in the day. Asking prices are likely to redevelop at recent levels of $121 live and $196 dressed. While asking prices are holding at $126 to $127 live and $200 to $203 dressed. A price gap of $5 to $7 per cwt at this point in the week remains wide and will likely take both sides willing to move significantly to get any sales put on paper. Cattle futures are expected to open mixed in limited activity. The narrow market shift Thursday focused on grain market weakness. The upcoming Friday morning USDA report is going to be watched closely as major implications in grain stocks could shift market prices in both grain and cattle trade.
Cash hog prices are expected to be steady to $1 per cwt lower. The recent shifts lower in futures markets and pork cutouts seem to have little impact in early cash-market activity as packers are able to gain access to market-ready hogs with prices generally steady to weak. Most bids Friday are expected to remain steady to 50 cents per cwt lower with packers gaining access to increased hogs in order to fuel the active Saturday run. Futures trade is expected to remain under pressure once again. With April contracts leading the complex lower and setting 2019 lows, the focus now has moved to $58.45 support levels set last August. The wide market swings this week have made it very clear that these price levels are within reach. Traders continue to struggle with growing uncertainty about demand growth through the rest of the year as rising amounts of market-ready hogs continue to enter the market. Slaughter runs are expected at 465,000 head Friday Saturday runs are expected near 214,000 head.
| BULL SIDE | BEAR SIDE |
| 1) Growing uncertainty is expected through the end of the week with the USDA crop production report being released late morning. The combination of market information available due to the past government shutdown may create a wild shift in markets. Any pressure in grain trade through the morning is expected to be viewed as bullish for feeder cattle. | 1) Continued market weakness continues to develop in wholesale beef values with cutout values shifting lower once again Thursday. This is adding to additional market concerns that demand may be faltering through spring months. |
| 2)Nearby live cattle futures continue to hold within striking distance of contract highs despite recent market volatility. This is expected to create additional fundamental momentum based on expected cash market support. |
2)The inability of packers to aggressively move into the cash market before Friday is limiting the chance of strong cash market gains once again through the week. Limited firmness has been seen through the last month, allowing for packers to gain needed supplies while limiting overall spending.
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| 3)Weekly export data released Thursday posted active 2019 pork sales with 15,200 metric tons reported for China. These numbers were as of Dec. 12, 2018, and gave markets no confidence Thursday. The focus on future sales is still positive to the market over the long term. | 3) Sharp losses in nearby lean hog futures broke through crucial support levels Thursday. This created growing concerns that prices could easily reach April contract lows. This would likely spark additional aggressive technical selling. |
| 4) Tyson president and CEO mentioned that the "impact of African swine fever is probably a little worse than what is reported." This continues to give some hope for long-term demand growth that business in China and Asia in general may need to rely on our pork supply to meet demand. | 4) Pork cutout values have continued to erode through the week as supply levels have continued to outpace demand. This may continue to put pressure on cash and futures trade through most of February. |
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| #completecalfcare |
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