Firm early-week gains in the futures complex sparked additional underlying support after strong price pressure in late March. Traders continue to focus on the ability to regain market momentum at current price levels, rekindling boxed beef values as traders look for stronger consumer demand in the next couple of weeks. The expectation is that cash market activity will be delayed until late in the week, even though packers are expected to return to the market generally short-bought. Traders seem to be focused on slow but steady growth over the next couple of weeks, which could reestablish price support in a sideways market trend for the next couple of months.
Stability developed Monday in lean hog trade, allowing traders to focus less on the wild market shifts last week, and more on the ability to bring active trade interest back into the complex in early April. Prices are expected to open mixed in a narrow-to-moderate trading range, staying within the current wide but sideways trading range, with focus likely on domestic demand ahead of the Easter holiday season. Traders are also likely to anticipate export announcements to China, which will be reported Thursday morning. The underlying focus on weekly sales to China sparked the overall wide market moves higher and lower the last few weeks, and could continue to spark widespread interest in the next few months. Cash hog values are likely steady to $1 per cwt higher with most bids firm Tuesday morning. Expected slaughter Monday is at 477,000 head.
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Firm underlying support in wholesale beef values early in the week is rekindling buying momentum in the entire beef complex during early April.
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April and June live cattle trade remains below the 40-day moving average. The pullback in prices late last week has created underlying technical pressure in the complex, potentially limiting buyer interest the near future.
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Cash traders are expecting packers to remain short-bought not only through the early part of April, but over the next several weeks, which should stimulate additional buyer interest for the rest of the spring.
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Limited follow-through buyer support at the end of the trading session Monday is creating concern that buyer depth remains narrow, and the potential to outlast a strong shift lower could cause any buyer support to crack under the pressure.
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More stable prices in early April may not only bring additional traders to the complex but could focus the attention on potential commercial and noncommercial growth for the rest of 2019.
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The most recent rally in lean hog trade was primarily based off one week of strong buying activity to China. If active sales to China do not develop in the next two weeks, additional firm market pressure is expected as traders give up hope of active trade in the near future.
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| 4) |
The next round of trade talks between the U.S. and China are expected to start later in the week as the Chinese delegation travels to the U.S. in the next few days. The hope that each meeting moves both sides closer to finalizing a deal is still sparking hope in all hog trade.
| 4) | Because of the overall lack of data and lack of accurate and reliable information about African swine fever in China,the true impact on the pork industry isunknown. This makes it nearly impossible to get an accurate understanding on what potential demand will be in the next few months. |
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| #completecalfcare |
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