Cash cattle interest is expected to remain sluggish Monday morning following light-to-moderate trade last week that developed before the holiday break on Wednesday. Showlist distribution and inventory-taking is expected to be the main order of business Monday, with bids and asking prices likely to be unavailable until Tuesday or later. Futures trade is expected to be mixed in limited early trade with a combination of follow-through buying and position-taking expected in the first couple hours of trade. The sluggish activity late last week sparked widespread gains in live cattle and feeder cattle trade, but the increased volatility surrounding potential moves in grain prices and limited support in beef values during early July is likely to limit upside market shifts the next couple of weeks.
Sharp losses late last week was likely driven by lack of trade interest in the hog complex after the holiday break rather than any significant shift in fundamental, or technical direction. Triple-digit losses in all contract months at the end of the week are creating some additional uncertainty as increased trader interest moves back into the complex Monday morning. August futures settled at $77.05 per cwt, well off recent highs, but still nearly $3 per cwt above long-term lows set in late June. This is expected to continue to refine the price ranges of the sideways market trend that is developing during early July. The potential for long-term demand growth continues to limit the downside potential in the market, although without significant product movement to China, or progress in trade deal talks, it is going to be hard to spark aggressive buyer support in the near future. Cash trade is called steady to $1 lower Monday morning with most bids steady. Expected slaughter Monday is at 477,000 head.
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Active commercial buyer support is moving into feeder cattle trade during early July. This helped to post aggressive triple-digit gains at the end of the week, putting increased expectations on follow-through support over the next few trading sessions.
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The recent rally in corn prices during early July continues to add concern through the entire cattle complex, with traders refocusing on increased production costs.
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August live cattle futures broke through short-term resistance levels Friday, as spot futures moved to $107 per cwt during the sluggish post-holiday trade. This is helping to rekindle additional long-term market support in early July.
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Depressed cash cattle values through the last several weeks continue to create concerns about active price support in wholesale beef values during midsummer, creating questions about upcoming demand support for most beef products.
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Active support redeveloped late last week in wholesale pork values. This could create continued buyer support in most primal cuts through the upcoming weeks.
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Triple-digit losses Friday are expected to create additional weakness during early-week trade. This may spark some additional liquidation, pulling away from the recent gains in the complex.
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Renewed focus on growing pork demand through China and other Asian countries will still cause underlying support with pork values hovering around $77 per cwt. This could stimulate moderate export business over the next several weeks and months, helping to clear current domestic supplies.
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Uncertainty surrounding export demand, and the ability to move additional product into the Chinese market, continues to limit the upside potential of the entire pork complex this summer.
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