April live cattle futures have rallied $2 per cwt in the last two trading sessions. This is starting to create uncertainty through the nearby contracts andthe entire cattle complex. Each weekly rally in the last two months has been followed by a moderate-to-firm retraction that has pulled prices away from contract highs. This is expected once again, but uncertainty remains as to when buyers will back away from the market. The sharp losses in hog trade have provided a safe haven for additional noncommercial traders looking for a place to invest, given the landslide in nearby lean hog trade. This trader group could quickly leave cattle futures if a market bottom develops in the hog complex. Cash cattle trade is undeveloped for the most part, with just a handful ofcattle sold in Texas. A wide gap between asking prices and bids will continue to keep packers and feeders at odds until the end of the week.
Additional bearishness continues to hover over the entire hog complex as front-month April futures saw nearly $7 per cwt vanish the last two days. Spot-month futures are setting new contract lows each time there is a shift lower, which is limiting buyers from stepping in to stop the avalanche. Cash markets are showing no sign of change with bids resurfacing steady to $1 per cwt lower through the week. Given the weather conditions and challenges getting hogs to market midweek in some areas, packers are expected to try to catch up with hogs that have already been committed earlier in the week. This may significantly limit the number of hogs purchased by packers through the end of the week. Slaughter runs are expected at 477,000 head Thursday. Saturday runs are expected at 156,000 head.
| BULL SIDE | BEAR SIDE |
April live cattle futures moved to $129 per cwt, which once again set new contract highs as additional demand support is expected to develop with cash markets expected steady to higher at the end of the week.
| Increased placement and on feed numbers in the delayed Cattle on Feed report is likely to add uncertainty about overall supply levels. |
| Live cattle futures are trading at the highest level since February 2018 on the continuous chart. A move above the 2018 high of $130.10 would likely spark additional noncommercial support through the entire complex. | Feeder cattle futures have become reluctant to follow live cattle futures higher with sluggish gains showing that traders are concerned about potential production cost changes surrounding any trade deal with China. |
| Lean hog futures remain oversold and are due for a market correction. Any sign of selling easing up is expected to spark widespread short-term buying through the complex, regaining a portion of recent losses. | Continued pressure in lean hog futures has once again eroded market support. This active selling through the day adds validity to the continued market liquidationbut is not based on "just" emotional selling. |
| Deferred hog futures continue to avoid the aggressive market pressure this week. With narrow gains developing in fourth quarter contracts Wednesday, buyer support is starting to firm as traders look for long-term support. | Cash hog prices continue to steadily erode, as packers continue to be flooded with market ready hogs even though record processing schedules continue. |
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| #completecalfcare |
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