Cattle futures are expected to open mixed in
limited volume following light-to-moderate buyer support able to wedge
themselves back into the complex late Thursday. This could signify
additional market firmness as traders start to build on the oversold
status in the complex as well as increased overall buyer interest that
has been building on the sidelines, but unwilling or unable to step into
the bearish market structure until this point. Even though live cattle
and feeder cattle futures will have little resistance moving higher once
additional volume moves into the complex, it is likely that trade will
establish a narrow-to-moderate range above current support levels with
little emphasis put on moving prices back to springtime highs. This
could establish renewed market structure around $108 to $112 per cwt in
live cattle futures for the rest of May. Cash cattle trade appears to be
finished for the week following the moderate-to-strong price pressure
developing in trade Tuesday and Wednesday. The combination of aggressive
early-week trade and focus on swift market pressure is causing both
sides to go back to the drawing board the next few days and reassess
longer-term direction and potential direction in the next couple of
weeks.
The swift market shift in lean hog trade
Thursday afternoon may have been the signal traders have been looking
for the last week. Initial sharp pressure Thursday morning focusing on
still bearish market structures and lack of active pork sales to China
last week had limited impact as the session continued. This selling
activity became weak as the market continued, leading to additional
underlying buying to flood the market before closing bell. Lean hog
trade is expected mixed to mostly higher with firm underlying support
being rebuilt in nearby contracts. The overall lack of long-term
direction and uncertainty surrounding trade talks going on with China
and how African swine fever will impact short-term pork buying from the
U.S. is still keeping traders cautious and will limit the upside
potential to the market through the end of the week. Cash trade is
called steady to $1 lower Friday morning with most bids steady. Expected
slaughter Friday is at 462,000 head. Saturday runs are expected at
12,000 head.
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| #completecalfcare |
| BULL SIDE | BEAR SIDE | ||
| 1) |
Firm futures support moved through
feeder cattle trade during late-week trade. This is helping to establish
new support levels, as prices are quickly bouncing off of contract lows
through the end of the week.
|
1) | Pressure in cash cattle prices in early week trade sparked additional underlying concern that follow-through market pressure may develop in the coming weeks. |
| 2) | Active beef export sales were reported Thursday with net sales of beef at 24,200 metric tons for 2019. This is a firm gain from week-ago levels and up 30% from the previous four-week average. | 2) | Cattle futures still remain well below 40- and 100-day moving averages following the recent market pressure. This will take time and renewed trade interest to spark some additional interest through the complex. |
| 3) | Strong late-week support is moving into pork cutout values, helping to rebound expectations of increased pork demand as rib and belly cuts regained significant support. | 3) | Growing concern surrounding the ability to get a trade deal with China done in the near future, or even at all will continue to hover over the entire hog complex through the next several weeks. |
| 4) | Strong triple-digit gains moving into lean hog futures late Thursday quickly turned prices higher following initial market pressure. This accounted for a $4.45 per cwt swing in deferred contracts Thursday, creating momentum at the end of the week. | 4) |
New tariff levels on products bought
from China is expected to bring about retaliation restrictions on
products. Pork products are expected to be one of the products impacted
through the escalating trade war.
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