Limited cash cattle trade finally developed late Friday with live prices generally $112 per cwt, $1 lower than the previous week. Dressed trade developed at $183 per cwt, which is steady with the previous week. The overall lack of support in cash markets following the week-long standoff between packers and feeders is expected to be generally bearish to the entire tone of the complex. Weekly cash business Monday is expected to be limited to showlist distribution and inventory taking as both sides try to regroup and evaluate not only weekly direction, but the potential market shifts over the next several weeks and months. Futures trade is expected to remain mixed once again Monday morning with limited direction likely early in the week. The stability in beef values over the last several days is limiting widespread movements in beef values as traders continue to focus on a potential sideways trend developing over the near future.
Limited buying activity is expected to redevelop Monday morning as follow-through interest is likely in nearby futures contracts. The underlying firm tone in the complex continues to hold as traders pushed prices higher at the end of the week based on firming market fundamentals. A firm move higher early in the week would break through short-term resistance levels in nearby contracts, sparking potential interest from commercial and noncommercial traders over the next couple of weeks. There is limited hope redeveloping in the complex as trade talks with China are expected to take place in China through the week. Although overall expectations of the talks have been lowered greatly from earlier rounds, the potential to continue the dialogue and slowly move the process forward seems to be the underlying tone surrounding the upcoming negotiations. Cash bids are expected $1 to $2 per cwt higher with most bids $1 higher. Expected slaughter Monday is at 475,000 head.
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Late-week gains in feeder cattle futures have sparked renewed support through the cattle complex. The firm nearby gains Friday broke through short-term resistance levels, setting two-month highs.
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Cash cattle trade ended last week steady to $1 per cwt lower. Given the underlying standoff until late Friday, this is viewed as slightly bearish for the entire cattle complex.
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Firm follow-through buyer support continues to slowly trickle into live cattle futures trade with traders comfortable holding prices at the top end of the summer price range. August futures have rallied $6 per cwt over the last month, sparking potential underlying support through late summer.
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Boxed beef values continue to show market softness with lackluster demand interest developing in late July. This may limit the recent support in futures trade, if traders focus on the lack of potential gains in wholesale beef values over the near future.
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Strong support has continued to develop in cash hog markets, with buying support increasing daily over the last week. This is sparking increased expectations of firm additional gains across the hog complex.
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With the trade talks this week with China, limited positive moves re expected in the pork complex based on trade deal expectations. Traders seem to be extremely cautious in setting bullish expectations given the lack of success in previous talks.
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Limited but bullish expectations are seen as the U.S. and China delegations get ready for another round of trade talks. Although sweeping decisions are not expected by the end of these talks, the hope is that some progress is expected to help stimulate market support.
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The strong market surge over the last month continues to leave the lean hog futures complex vulnerable to a moderate price correction that may last more than one or two trading sessions like was seen last week. Prices are becoming more vulnerable at current levels with still strong pork production expected to limit the upside momentum through fall months.
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