Cash cattle trade is expected to remain sluggish Tuesday morning with limited interest in asking prices or bids. The firm cash market support last week should spark some additional underlying momentum from feedyard managers, although underlying softness in futures trade could limit market potential. The recent developments of midweek trade may spark some additional interest the next couple of days, but most activity may still be delayed until the second half of the week. Futures trade is expected mixed to moderately lower following firm pressure in live cattle and feeder cattle trade. This could bring additional momentum back into the complex the next couple of days, but price volatility is likely on Tuesday.
Follow-through pressure is expected early Tuesday morning in lean hog futures following aggressive early-week losses. Traders continue to wrestle with increased underlying concerns that the previous hype and expectations surrounding China demand for pork may be overbuilt. This has caused some to back away from previous market expectations. The potential of a trade deal with China and the need for pork due to African swine fever in China will create opportunities in the near- and long-term future. Despite recent softness, there is still the potential for underlying support. Cash trade is called $1 lower to $1 higher Tuesday morning with most bids steady. Expected slaughter Tuesday is at 477,000 head.
| BULL SIDE | BEAR SIDE |
| 1) Early-week support in beef cutout values sparked some renewed fundamental interest in the complex. | 1) Traders continue to focus on the larger-than-expected growth in fed cattle. This may continue to curb upward market potential through the end of the month. |
| 2) Growing expectations concerning upcoming summer demand is helping to keep nearby futures generally stable as traders feel the potential for market support continuing through the next few months. | 2) Cash cattle activity is not expected until later in the week. The pressure in futures trade may cause increased softness in early packer bids and the desire to trade cattle at steady to higher money through the end of the month. |
| 3) Strong underlying demand is expected in both domestic and export markets through the rest of the year. This should help to bring some stability and longer-term support to the entire lean hog complex. | 3) Sharp triple-digit losses in June futures led the underlying futures market weakness Monday. This is expected to spark additional concerns surrounding the ability to sustain market support the next couple of weeks. |
| 4) Light-to-moderate support in pork cutout values focused on aggressive gains in butt and ham markets early in the week. There are continued expectations of additional short-term price support in most primal cuts. | 4) Cash hog prices tumbled sharply lower Monday, pulling back from end of week support last week. Some additional volatility is likely to develop in cash trade as packers try to assess the overall direction of the market. |
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