Cash cattle trade is expected to remain generally undeveloped through the day with asking prices likely to be more available as the day goes along. Although cash cattle trade is not expected to be active until sometime Thursday or Friday, bids may develop midweek. Futures trade is expected to remain mixed to mostly higher with firm support, which has developed in live cattle trade through the week is helping to bring some additional market stability to the entire complex. Feeder cattle trade will continue to be heavily influenced by the movement in grain trade, based on overall production costs associated with feed costs.
Cash hog bids are expected to once again fit into the typical range in hog markets with early bids steady to $1 per cwt lower. Most bids are expected 50 cents lower early in the morning as packers continue to gather needed hogs without digging deeper into their pockets. Futures trade is expected to bounce higher through the morning as short-covering after Tuesday's market pressure will allow for light to moderate upward market shifts without significant resistance. The firmer tone early in the week is still helping to solidify longer-term direction, as buyers look for opportunities to steadily reenter the complex. Slaughter runs are expected at 477,000 head Wednesday. Saturday runs are expected near 214,000 head.
| BULL SIDE | BEAR SIDE |
| 1) Live cattle futures have continued to steadily shift higher through the week. This is allowing many traders and market watchers to expect potential contract highs once again in nearby trade. The underlying support and expectations may bring additional commercial interest back into the market. | 1) Market pressure in feeder cattle trade most of Tuesday has quickly moved the focus away from strong market shifts higher and into what could become a more volatile and choppy market structure through the month of February. |
| 2)Limited movement in grain trade the last several days has helped to sustain additional buyer activity in feeder cattle this week. Despite soybean buying activity from China, soybean markets have struggled to develop support. This is expected to continue to drive buyers into feeder cattle trade through the near future. |
2)Beef values have struggled to show consistent market support during early February. This is creating some underlying concerns that market depth may be limited and could create some bearish sediment moving into the entire complex.
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| 3)With nearby lean hog futures well off of recent support levels, the expectation is that additional commercial buyer support will continue to develop in the next few trading sessions. The upside of the market remains very unrestricted technically, as traders continue to focus on uncertain fundamental long-term demand. | 3) Sharp triple-digit losses in pork cutout values Tuesday have brought the overall hog market back to reality following the early-week surge in futures prices. Overall growing supply levels may continue to limit pork values in the near future. |
| 4) With African swine fever continuing to be a threat to China's hog supply, there remains hope and growing expectations that the U.S. pork market will have to eventually fill a portion of that gap as the demand for pork in China is not expected to decrease. | 4) Wide triple-digit price swings through the week have set up the potential for increased market volatility. This could create challenges in rebuilding market support and sustaining continued futures gains. |
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