Cash cattle trade is expected to continue to
develop Thursday with both sides apparently desiring to wrap up business
before Good Friday. Light-to-moderate trade that developed in the South
on Thursday, may have moved enough cattle for the week in Texas and
Kansas. These sales developed at $126 per cwt, which is $2 per cwt
higher than last week. Trade in the North has yet to develop, but the
firming tone is causing stronger asking prices of $128 to $130 live and
$208 and higher dressed. The expectation is that cash cattle prices will
be higher in all areas by the end of the week. Futures trade is
expected to be mixed with additional narrow trading shifts likely
Thursday morning. The release of the March 1 Cattle on Feed report
Thursday afternoon could add some additional pre-report positioning into
the complex. Although the report is not expected to deliver any huge
surprises or revelations, the general tone of light-to-moderate supply
growth and reduced marketing during the month of March is likely. Most
of these expectations have already been factored into the complex, and
may not bring about any significant price shifts Thursday.
All eyes will be on the 7:30 a.m. CT release of
the weekly Export Sales report. Traders will focus on any new sales to
China and also focus on overall shipments in the report. Following last
week's large export levels, the expectation is that additional strong
sales and shipments will be seen once again. But any sales are likely to
be supportive to the market as traders continue to look at both short-
and long-term movement to China. Futures trade is expected to remain
mixed once again, with the underlying firmness this week in deferred
contracts conflicting with moderate-to-firm pressure in nearby and spot
market trade. This could also create additional end of the week
adjustments ahead of the long weekend. Markets will be closed Friday in
observance of Good Friday. Cash trade is called steady to $1 higher
Thursday morning with most bids steady. Expected slaughter Thursday is
at 477,000 head. Saturday runs are expected at 89,000 head.
| BULL SIDE | BEAR SIDE |
| 1) Higher cash cattle trade that developed in Southern areas Wednesday is sparking additional expectations of firming cash values in all areas this week. | 1) Strong gains in cattle placement or total cattle on feed in Thursday's Cattle on Feed report could spark active pressure early next week. |
| 2) Continued underlying gains in boxed beef values is supporting expectations of seasonal support. Choice beef cutouts gained an additional 2.71 per cwt, moving to $232.76 per cwt Wednesday. | 2) Cattle futures remain stuck in the moderate-to-wide sideways trading range of the last two months. This could limit any additional market direction during most of the spring and early summer. |
| 3) Traders are looking for additional strong export sales to China in Thursday's Export Sales report. This would help to solidify additional short- and long-term interest moving into the complex. | 3) Lack of sales to China in the Export Sales report will be viewed as bearish to the market and will likely spark moderate price pressure through the session. |
| 4) Aggressive price support has moved into deferred lean hog trade in the last two weeks. December contracts have rallied over $9 per cwt in the last week and a half, shifting the emphasis from nearby trade, to long-term market expectations. | 4) Lack of fundamental support in cash hog values is not only breaking away from the recently strong underlying tone in the market but is also creating a disconnect between potential market support based on China and domestic market potential through the next couple of months. |
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| #completeherdhealth |
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