Up until now, cash cattle trade has been illusive as packers and feeders have held respective price levels with little movement or desire to meet in the middle. Packers remain short-bought and are expected to need to make adequate sales in order to fuel next week's procurement levels, but with recent support in futures trade and consistent beef demand, feeders are shooting for higher prices Friday. Bids and asking prices are expected to redevelop within the same range as earlier in the week, but active trade may not develop until late in the day. Futures movement is expected to remain mixed with traders not only trying to adjust to previous market shifts, but trying to assess the meaning and take home message of all of the backlogged report data that will be available throughout the day. With export data and Cold Storage reports covering multiple weeks and months, it is going to be a challenge sorting out what is still meaningful to the market during late February.
Cash hog values are steady to $1 per cwt lower in limited market direction as packers continue to gain access to needed hogs in order to fill end of the week procurement levels. Another round of severe winter weather is moving through the country, likely limiting overall hog movement to packing plants the next few days. Strong futures gain Thursday has helped spark additional interest in all markets with traders now trying to flesh out what exactly a trade deal will mean for pork exports. Most of the headline information that has been reported still has little information as to what will be affected and to what level. Like they say, "the devil is in the details" and so far, we have few details. Slaughter runs are expected at 470,000 head Friday. Saturday runs are expected at 151,000 head.
| BULL SIDE | BEAR SIDE |
Consistent buyer interest through live cattle trade has allowed for nearby contracts to hover near the top limit of trade from last week. This is expected to keep traders bullish through the end of the month.
| Uncertainty of how to and how much emphasis to place in the backlog of reports released Friday will create a mixed bag of messages through the trading day. This could leave the market more unsettled as traders take differing takes on historical data that will now be available. |
The release of updated export sales numbers is expected to help bring some underlying support to the beef complex with strong overall demand through early 2019, leaving expectations of a confirmation of active exports.
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Firm gains in grain trade late in the week is expected to leave feeder cattle slightly pressured as traders break away from movements in live cattle and beef values and refocus on overall production costs associated with corn and soybean market shifts.
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| Aggressive gains Thursday has quickly bounced nearby contract prices off of long term lows. This momentum shift through the week may be the turn around that traders have been looking for the last several weeks. | Despite posting aggressive gains Thursday in lean hog futures, traders and market watchers are well aware that one day does not create a trend. This will put even more pressure on regaining and sustaining market support at the end of the week in order to break the bearish market cycle in the hog complex. |
| Trade talks with China have the potential to spark additional aggressive support back into the weak and pressured hog complex. The indication that active pork exports will redevelop is supporting the complex. | Despite any potential export demand that can be redeveloped to China in a potential trade deal, China is still working on sustainable hog production even with African swine fever, which will limit long-term export support from the U.S. |
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| #completecalfcare |
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