Cash cattle trade is expected to develop,
although the tone appears to be set, following trade the last two days
with prices steady to $1 per cwt lower than last week. It is likely that
most trade will be done for the week, although with the release of two
major cattle reports at the end of the day, any additional cash cattle
trade could be delayed until after 2 p.m. Live cattle futures are
expected to remain mixed during early trade with limited follow-through
pressure developing in nearby contracts. An attempt for end of the week
short-covering could push prices higher through morning trade. The heat
wave sweeping across the country will continue through the end of the
week in most areas, which will add heat stress to most cattle
operations. At this point, the impact of this heat or any expected
production or death losses is not having an impact on live cattle or
feeder cattle markets. Market interest concerning weather conditions
could be muted in the near future, but if grain markets start to focus
on potential production losses once again, feeder cattle trade could see
additional pressure.
Early trade is expected mixed in a wide range
with limited additional direction expected through the end of the week.
The strong underlying bullish move the last couple of weeks is expected
to spark additional support through the end of the week. This may create
fundamental support as cash and pork values are expected to remain firm
through Friday. The uncertainty surrounding financial markets and
overall direction of export markets continues to hang over the entire
complex, but traders remain focused on firming domestic demand with the
potential that light export demand from countries besides China will
fill in the gaps, helping to slowly build underlying support. Cash trade
is called steady to $1 higher Friday morning with most bids steady to
50 cents higher. Expected slaughter Friday is at 467,000 head. Saturday
runs are expected at 17,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Firming boxed beef values is
expected through the end of the week, helping to bring additional
underlying support to the entire complex.
|
1) |
Feeder cattle futures remain unable
and unwilling to shift higher as traders back away from short-term
gains. This may create additional underlying pressure on Friday.
|
| 2) |
Recent sharp pressure in corn
futures is helping to reduce expected long-term feed and production
costs. This should bring additional support to feeder cattle trade on
Friday.
|
2) |
Cattle on feed numbers are expected
to increase nearly 2% from year-ago levels. This could spark
follow-through weakness as traders adjust to supply concerns through the
end of the year.
|
| 3) |
August lean hog futures continue to
test resistance levels above $83 per cwt. A move above this level at the
end of the week is expected to spark increased underlying strength
early next week.
|
3) |
Pork cutout values show limited
support as active pressure in belly cuts continues to undercut summer
demand expectations despite it being the heart of "BLT" season. The lack
of continued support in traditional summer demand for ribs and bacon
could derail further support.
|
| 4) |
Active price support is moving
through cash hog trade as packers aggressively source hogs in order to
keep active daily procurement levels of 477,000 head Monday through
Thursday, and moderate plant runs on Friday and Saturday. This is
expected to push cash bids higher at the end of the week.
|
4) |
Despite the strong market rally over
the last two weeks, an active market correction would come as a
surprise to many. This could quickly bring additional selling interest
into the complex at the end of the week.
|
 |
| #completeherdhealth |
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