Cash cattle trade remains elusive with limited interest midweek. Although a few bids have slowly developed at $125 live and $202 dressed, a $3 to $5 per cwt gap remains between asking prices and current bids. This is expected to narrow in the next couple of days, but at this point, both sides seem to be in no hurry. It is likely that packers may limit any aggressive moves until Friday,March 1, and the opening of a new month of financial spending. Futures trade should open mixed in a moderate range. The ability to hold prices generally stable through the end of the session has been impressive given the lack of firm direction in beef values and inactive cash trade. But traders continue to focus on this ceiling price of $130.10, which limited support Wednesday and the potential for another run at breaching this price point.
Packer activity has increased significantly through the week, although it has done little for market prices or the overall range of bids early Thursday morning. This may add even more volatility in early March since packers have negotiated more trade in the last two days than is typically seen in a week's time. The absence of active snowstorms in the next couple of days is a good sign for regaining balance not for only processors, but it will allow producers to move additional hogs and likely become more current in the next couple of weeks. Futures are expected mixed with limited end-of-the-month activity likely to develop. Even though prices seem to be well positioned above support levels, the last several weeks have shown that quick moves downward are never out of the question.
| BULL SIDE | BEAR SIDE | ||
| 1) | April live cattle trade continues to hover just below long-term resistance levels. A 20-cent move higher would move be past 2018 highs, then the target would be summer 2017 prices of $131.25 per cwt. | 1) |
A large blanket of cold air continues to hold over much of the Midwest. This is not expected to change in the next couple of weeks, creating challenging feeding conditions and reduced overall gains.
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| 2) |
Strong demand expectations continue to add market support to the entire complex as traders not only focus on firm short-term beef demand growth, but stronger market interest through the entire year.
| 2) | Stagnant price levels midweek in all futures left prices hovering in a narrow range as traders seemed unable to break through resistance levels that has seemingly capped market support in the last year. The inability to break through $130.10 during the week could create active pressure across the market. |
| 3) | Firm end-of-the-month buyer support is moving into nearby lean hog trade. This is helping to spark some additional expectations that continued buying will develop the next two days. | 3) | Strong triple-digit losses developed once again in wholesale pork prices. The wide daily price swings higher and lower have created a pattern that that has held the market rangebound the past couple of weeks. This could limit market support through early March. |
| 4) |
Active cash buying has swept through the market, with over 35,000 hogs sold in the negotiated trade the last two days. This activity indicates that packers are aggressively buying hogs at the end of the month.
| 4) | Even though prices are holding above short-term support levels, market prices are still within the bottom end of the trading range. This is creating concerns of further growth as limited trade interest is willing to step into this market. |
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| #completeherdhealth |
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