Firm pressure is expected to redevelop during early trade as limited support in the April contract Monday is sparking some uncertainty surrounding fundamental support. With April contracts closing Monday at $128.35 per cwt, continued pressure may develop until traders find any sense of support or can trigger any technical market shifts. The current gains the last couple of weeks could allow prices to wander in a wide $3 per cwt trading range without any significant market technical moves. The inability to move through long-term support may be the main hurdle traders have to face in the coming weeks. Cash cattle trade remains undeveloped with bids and asking prices still hard to pin down. This is likely to keep active trade from developing until the last half of the week.
Cash hog business is expected to get done with prices generally steady Tuesday morning. The full range of bids is expected to be steady to $1 per cwt lower as traders remain focused on the renewed support in pork values as well as the firm market rally developing in April contacts. Futures trade is expected mixed with follow-through support likely to slowly develop in April contracts as traders continue to move into the market through the week, distancing themselves from previous support levels just below $53 per cwt. Tuesday slaughter runs are expected at 477,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Continued buyer support is moving into wholesale beef values, with firm triple-digit gains developing in the last several days. This may help limit additional nearby live cattle pressure. | 1) |
There is no short-term end in sight for the below normal temperatures in much of the country. This will continue to hinder beef production and impact cow/calf herds through most of the Midwest. The increased snow in most of these areas will create even more challenging production issues once warm weather arrives and leaves lots and yards a muddy mess.
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| 2) |
Weather concerns surrounding the impact on young beef calves is sparking firm fall and winter gains through feeder cattle trade. The full impact is not yet know, but deferred price levels are taking precautions, moving prices higher.
| 2) | Strong triple-digit losses in April live cattle trade sparked underlying pressure through the entire complex. This added even more weakness to the entire cattle complex during early March. |
| 3) | April lean hog futures have moved nearly $4.50 per cwt higher the last the two weeks, allowing for renewed commercial and noncommercial interest to focus on potential market strength through the entire lean hog complex. | 3) | Cash hog values have shown limited support through the last two weeks as futures and wholesale pork values have worked prices higher. This overall lack of support continues to limit the upside market due to the amount of hogs available to packers. |
| 4) |
The underlying concern of African swine fever in China and other Asian areas, combined with the fear that this could move into other areas is helping spark some additional underlying firmness as traders look at continued long-term demand support.
| 4) | Lack of support in deferred contracts is causing even more uncertainty as traders focus on the potential support from any trade deal struck with China. Trade agreements would have a long-term impact, but the limited interest in these summer and fall contracts shows underlying concern. |
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| #completecalfcare |
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