Active pressure midweek is opening the door for additional technical pressure for the last two trading sessions of March. Even though most contracts still remain above the short-term support levelsfrom early March, the break below $126.65 in April contracts sparked a market reversal and increased liquidation. Trade is expected to remain sluggish early Thursday morning, although the overall tone of the complex continues to weaken following the early development of cash cattle trade at lower money. Traders are watching the overall outside market direction, which had a significant impact on midweek price levels, for follow-through pressure in the coming days and weeks. Cash cattle trade started to develop at midday on Wednesday, surprising most in the market how quickly things developed as traders tried to cover basis levels. Prices were $126 live and $206 dressed, although additional trade is possible through the end of the week. But at this point, prices are likely to already be set.
Follow-through buyer support is expected in nearby spot traded lean hog futures Thursday following continued support in cash and wholesale pork values. Traders continue to focus on the direction of trade and news of any agreement with China. This may limit overall direction as the recent market rally still has room to move lower before renewed buying steps back into the market. Cash hog values are expected to be steady to $2 per cwt higher with most bids $1 per cwt higher Thursday morning. Expected slaughter Wednesday is at 477,000 head. Saturday runs are expected at 146,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Early-week cash cattle trade indicates just how short-bought packers are going into the end of the month. Even though price levels are not able to follow, the potential for packers to aggressively search for cattle may continue through early April.
| 1) |
April live cattle trade has broken through early March support levels of $126.65 per cwt, sparking potential weakness the rest of the week.
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| 2) |
Active movements in wholesale beef levels continue to spark increased overall long-term support and expectations of further gains through the next two months.
| 2) |
Strong outside market pressure has crept through livestock trade, quickly sparking moderate-to-strong softness through live cattle and feeder cattle trade.
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| 3) |
April lean hog futures continue to surge higher, driven by fundamental support as commercial buying interest continues to hold prices above $80 per cwt.
| 3) |
Limited news surrounding any trade deal talks with China has created uncertainty in the market, which could lead to mixed messages through the end of the month, leaving prices unsettled.
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| 4) |
Cash hog prices have continued to surge higher despite the limited support in futures trade. The need and ability for packers to gain access to market-ready hogs is allowing for increased spending in all areas.
| 4) | Despite gains in nearby lean hog trade, the inability to sustain buying interest is adding weakness in the entire complex. |
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| #completeherdhealth |
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