Sharp triple-digit gains late last week has sparked increased underlying support through the entire complex. Weather and flooding concerns are still the main focus through most of the northern part of cattle country. Not only are many feed years underwater, with no idea of how many cattle have been washed away or killed, but the inability to get through many highway systems has kept much of cattle country in a limbo. The inability to move cattle will significantly impact overall packer activity through the week and had an impact on the overall amount of cattle sold last week on negotiated trade.
Strong gains have continued to develop through lean hog trade through the end of last week, with an additional limit gain of $3 per cwt rally moving in all nearby contracts. The focus on China trade interest moving back into the market despite tariffs still remaining intact has caused aggressive buying in cash and futures trade through the last week. April futures have rallied nearly $12 per cwt in the last week and a half with the most aggressive buying seen in the several trading session. Despite the potential for additional buyer support moving into the complex long term, more emphasis is expected on an aggressive potential market correction through the end of the month.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Widespread livestock buyer support across the entire complex is expected to bring about even more interest early Monday, especially in live cattle trade.
| 1) |
Historical flooding in many cattle-raising areas has been destructive to cattle market infrastructure in the last week. This will take weeks and months to assess and much longer to repair or rebuild.
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| 2) |
Triple-digit gains Friday in live cattle and feeder cattle trade point to tightening short-term support surrounding flood issues through most of the northern cattle country. This may add even more price gains as details of the amount of cattle impacted comes to light.
| 2) | Moving cattle in the wake of floodwaters has been the highest priority the last several days. Those who's cattle are already on higher ground have found little interest in moving cattle to plants until roadways are cleared and opened and floodwaters subside. |
| 3) |
Lean hog futures will entertain expanded trading limits through the entire Monday session following $3 per cwt limit gains Friday. The continued buyer support combined with potential additional export buying activity is likely to keep buyers aggressive.
| 3) |
Pork plant operations are going to be in question in many areas early in the week, with many of these areas plagued by either flood issues or closed roads, which will inhibit the movement of animals or employees to plants.
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| 4) |
Cash hog values have continued to surge higher, with packers once again having a hard time moving market ready hogs to plants due to road closures and flooding. The recent market strength is sparking more interest in attaining additional hogs at this point.
| 4) | The aggressive buyer support flooding the market in the last week and a half has moved April lean hog futures into an oversold position. This could add some additional uncertainty through the entire complex. |
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| #completecalfcare |
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