Limited cash cattle interest is expected Wednesday morning, although packer bids in the South are likely to become more active through the session Wednesday following the limited trade late Tuesday. Bids are expected to redevelop around $122 to $123 live basis. Asking prices remain around $126 and higher live and $208 dressed. Most of the midweek activity is likely to be in the South, but trade could be spread out through the rest of the week. Firm weakness quickly developed in the feeder cattle trade, which has added additional underlying pressure going into early May. This is likely to keep the overall tone of the market weak as traders search for signs of renewed buyer support in both live cattle and feeder cattle trade. The strong pressure in the complex is opening the door for a market rebound in the near future, but cattle trade will need to stabilize first, and so far that has yet to happen.
Buyers were unable to hold onto strong gains on Tuesday, which added more weakness to the entire complex and could add even more morning pressure Wednesday. Traders are once again focusing on the next round of trade talks with China, hoping for some additional information that will indicate a deal is either close or moving in that direction. The more rounds of talks that happen the more nervous all market participants become that there will be a stalemate that both sides cannot move past. Given the pressure the last couple of weeks, the expectation for a moderate market rebound is building. This may add increased movement in the next few days. Cash trade is called steady to $1 lower Wednesday morning with most bids steady to 50 cents lower. Expected slaughter Wednesday is at 476,000 head. Saturday runs are expected at 36,000 head.
| BULL SIDE | BEAR SIDE |
| 1) Stability in grain markets is allowing for lower overall production costs to feed cattle in the summer months. This is expected to help add additional longer-term support back into the market the next few weeks. | 1) Feeder cattle futures have set contract lows in spot May contracts, leading to additional pressure in the entire complex. This could add follow-through selling pressure in early May. |
| 2) Overall expectations of beef demand has not changed in the last couple of weeks, despite falling futures prices. This is likely to help support overall market fundamentals through the next couple of weeks. | 2) Weakness in beef cutout values early in the week has added increased bearishness to the cattle complex. The inability to sustain firm wholesale meat prices at this time of year is concerning traders that overall demand may be faltering. |
| 3) Even though market watchers are weary of continued talks with limited direction, great expectations continue to hold for developing trade talks with China. | 3) The strong market reversal Tuesday added increased bearish concerns to the entire lean hog complex. Traders were unable to hold triple-digit gains, which led to additional aggressive losses by the end of the session and is concerning the entire industry. |
| 4) Packers continue to search for market-ready hogs as they keep procurement levels aggressive. This has helped to firm cash prices early in the week despite futures market pressure. | 4) Further concerns that Thursday's Export Sales report may not post strong China sales is creating some additional market pressure on the first day of May. This could add additional weakness to an already-soft market structure. |
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| #completecalfcare |
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