Cash cattle interest still remains quiet, but given the limited activity over the last month, especially in the South, it is hard to rule out the development of at least limited trade midweek. This could spark some additional market activity through futures trade after choppy market direction has developed in the last couple of sessions. Bids are expected to remain quiet until at least later in the day, with asking prices holding at $130 live and $212 dressed. The overall limited interest is expected to be carried in live cattle and feeder cattle futures trade through the morning. Although there is potential for increased additional softness to develop, markets still remain well rooted in the sideways trading range, allowing for light-to-moderate short-covering to develop during morning trade. This may add some additional late-week support to all cattle markets.
Firm pressure early in the week is expected to leave markets vulnerable for additional price pressure the next couple of days. Although the lack of solid long-term demand potential has continued to leave market questions about just how much further buying interest will be seen from China, the focus on current strong production levels and seasonal demand for pork within the country is likely to help support fundamentals. June futures have pulled back nearly $7 per cwt from early-month highs, as traders continue to focus on the long-term potential of China trade. The potential for a quick and aggressive market rebound may keep markets shifting in a wide range through the end of the month. Cash trade is called steady to $1 higher Wednesday morning with most bids steady. Expected slaughter Wednesday is at 477,000 head. Saturday runs are expected at 189,000 head.
| BULL SIDE | BEAR SIDE |
| 1) Seasonal beef demand is expected to keep buyers active for the next couple of months with traders still focusing on active consumer demand. | 1) Wholesale beef values faltered Tuesday, allowing for light-to-moderate pressure. This is creating some underlying nervousness given the recent cash market support. |
| 2) Live cattle futures remain well above initial support levels of $119.97 per cwt in June contracts. This is likely to stimulate additional underlying buying demand in the next few days. | 2) Moderate-to-firm pressure in nearby live cattle trade this week has created some additional uncertainty about short-term buyer interest. Even though prices remain well rooted within the current range, the lack of follow-through support for most of April is adding increased trade uncertainty. |
| 3) Wholesale pork cutout values continue to rally higher with aggressive triple-digit gains seen in butt and rib markets based on seasonal support developing through late spring. | 3) Follow-through liquidation Tuesday continues to pull prices well off of recent market highs. Even though active export demand continues, the fact that earlier gains are likely to be well overstated is causing growing price pressure in the entire lean hog complex. |
| 4) Cash hog values continue to remain supported as packers find themselves needing to pay steady to higher money for market-ready hogs in order to supply the aggressive procurement schedules that have developed during early 2019. | 4) Despite the need for packers to aggressively search for market-ready hogs to fill the expected daily runs of 475,000 or higher, margin pressure for packers is starting to curb cash values. This could limit further cash market support, especially given the strong pullback in futures trade. |
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| #completeherdhealth |
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