Cash cattle interest is expected to remain sluggish through most of the day as asking prices and bids are still unavailable, and it may stay that way until either late Tuesday or sometime Wednesday. Light-to-moderate cash cattle trade could develop in the South by Wednesday. Given the early-week firmness in futures trade and expected follow-through demand support, feeders are unlikely to give in to steady-to-lower bids early in the week. This could create a standoff over the next few days with a wide gap between asking prices and bids likely the next few days. Futures trade is expected to be mixed, but the firm tone early in the week could continue. Traders continue to assess short-term resistance levels in live cattle and feeder cattle trade. If contracts can break through last week's highs, the potential for increased underlying buying will significantly increase.
Moderate buyer support is developing in lean hog trade as traders add to the market rally seen the last two weeks. With nearby contracts posting aggressive gains and as traders move prices away from summer lows, the focus on follow-through support continues. Although technical support remains strong, the generally unchecked market rally is creating greater opportunities for a market correction. Typically, Tuesday is the day when a major market shift develops through most commodity markets, which could create wide market swings through morning trade. The underlying tone of the market remains bullish, although global trade uncertainty may limit recent optimism. Cash trade is called steady to $1 higher Tuesday morning with most bids 50 cents higher. Expected slaughter Tuesday is at 477,000 head.
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Early-week gains in feeder cattle posted aggressive $2 per gains in most contracts. This continues to add underlying support to the entire cattle complex with nearby prices rooted above $140 per cwt during mid-July. This could create additional bullish market support in nearby trade.
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Wholesale beef values continue to struggle to show consistent support through the last couple of weeks. This is creating concerns that underlying demand may slow through the rest of the summer.
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Active support in spot live cattle trade is testing last week's highs. A move above $108.50 per cwt in August contracts would set new summer highs, sparking potential follow-through buying through the week.
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Sharp early-week feeder cattle futures is leaving the complex ripe for a market pullback over the near future. Although the underlying tone of the market remains firm, the potential to show significant losses in feeder cattle trade Tuesday could limit additional buyer support.
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Lean hog futures continue to quickly distance themselves from summer lows as aggressive technical support develops. This is likely to solidify additional buyer interest through the near future.
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Pork in cold storage increased 11% from year-ago levels, as the continued supply surge and limited export movements continue to allow for larger stockpiles of product through the end of June.
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Wholesale pork values continue to explode higher, with aggressive gains developing in not only traditional summer cuts like ribs and bacon, but firm underlying support in most primal cuts over the last week. This is expected to build additional fundamental support.
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Nearby lean hog futures have posted an aggressive, unchecked market rally the last two weeks. October futures have rallied over $11 per cwt. This is creating a significant opportunity for a market correction to develop in the near future, which could lead to sharp short-term losses.
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| #completecalfcare |
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