Sluggish movement in live cattle trade is expected to continue with traders closely focusing on outside market direction through midweek as well as growing volatility in lean hog markets. Initial mixed trade is likely to develop in live cattle and feeder cattle trade with the entire complex remaining comfortable within the moderate sideways trend of the last several weeks. After prices were able to hold support values last week, light-to-moderate buying activity in nearby contracts is slowly redeveloping. This could provide additional underlying support in fundamentals with traders closely monitoring the direction of beef cutout values as well as cash market direction. Cash trade is expected to remain sluggish with increased bids and asking prices developing through the day. Although another round of Wednesday trade is possible, most cash market activity is likely going to be pushed to the end of the week.
Limited buyer support is expected early Tuesday morning following the early-week market adjustments, which posted strong nearby losses early in the trading session and held nearby contracts lower through most of the session. This may add increased underlying softness through the first couple hours of trade, although the tone of the market still remains bullish. With no significant details or developments coming out of last week's trade talks with China, the focus in the lean hog complex continues to once again move to the next expected gathering and the expectation that something will develop in the near future. The expectation in the lean hog complex is that a trade deal will develop at some point, and this will remain generally bullish for pork prices due to China's need for pork. African swine fever continues to be the underlying theme, which is pushing market expectations due to the expected need for pork in China and other Asian countries. Cash trade is expected $1 lower to $1 per cwt higher Wednesday morning with most bids steady to 50 cents lower. Expected slaughter Wednesday is at 477,000 head. Saturday runs are expected at 56,000 head.
| BULL SIDE | BEAR SIDE |
| 1) Underlying seasonal support is expected to continue to develop in beef markets, which is likely to stimulate additional product movement in the upcoming weeks. | 1) Beef values have struggled to show significant market support through early week trade. This could quickly limit follow through buyer interest in all cattle markets. |
| 2) Active open interest levels continue in live cattle trade with total open interest listed at 443,789 contracts. This is a gain of 1,373 contracts Tuesday. This has sparked additional underlying interest from commercial and noncommercial traders through early spring. | 2) Another round of wet and potentially cold weather is moving through the Northern Midwest in the next few days. With significant snow predicted in some areas. This could adversely impact cow herds that have already been impacted by earlier weather conditions and flooding through the spring. |
| 3) Renewed reports of African swine fever decimating the hog herds in Vietnam continues to put emphasis on the destruction of the situation and long-term support for pork products. | 3) Limit losses in many lean hog futures contracts have sparked underlying pressure across the entire complex. This may add some additional pressure to the complex as the emotions momentum that drove prices higher appears to be changing. |
| 4) Despite the volatility in most lean hog futures trade, spot month hog markets and fundamentals continue to be generally stable through the last couple of weeks. | 4) Lack of information on a trade deal with China and questions about active sales in this week's export sales report has caused traders to wonder just how much active buying there will be in the next few weeks or months. |
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| #completeherdhealth |
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