Cash cattle activity is expected to improve through the day with both sides desiring to trade cattle before leaving for the holiday break Thursday. But given the stability in futures trade and recent firmness in boxed beef values, feeders are likely to hold steady to asking prices. Bids are likely to redevelop in the same range as Tuesday around $107 live in the South and $178 dressed in the North. With asking prices significantly higher than these offers, it is unlikely any interest will be shown at these levels, but it could get the ball rolling with steady-to-firm weekly price levels a strong possibility by the end of the week. Futures trade is expected to be mixed and limited as many traders have already exited the market. Markets will close early Wednesday and will remain closed until Friday morning in observance of Independence Day. The feeder cattle tone continues to remain firm, but limited late-week volume may allow for a moderate-to-strong market correction to develop. The recent unrestricted rally has moved prices $6.50 per cwt higher in the last week. Although it is likely that renewed support will continue to develop, pressure through the end of the week would not be surprising as traders square positions.
Mixed but limited trade is expected early Wednesday morning. The lack of support Tuesday in most lean hog trade is not surprising, although sluggish activity may spark some moderate-to-wide price shifts due more to the lack of expected volume than dynamic market shifts. Traders continue to focus on possible outcomes to pork exports if trade talks redevelop. It is likely that given the need for pork by China, some additional buying may develop over the next couple of weeks as a "token of good faith" in order to stimulate the negotiation process, and also help to fill the demand for pork in the country. But it is important to remember, that just agreeing to continue talks, is still a long way off from reaching an agreement. Cash trade is called steady to $2 lower Wednesday morning with most bids $1 lower. Expected slaughter Wednesday is at 477,000 head. Saturday runs are expected near 190,000 head.
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| 1) |
Strong underlying support in feeder cattle futures has quickly and aggressively moved away from support levels over the last week. This is stimulating expectations of follow-through support through the entire livestock complex during the holiday week.
| 1) |
Cash cattle activity remains sluggish with packers showing little interest at this point of the week to aggressively buy cattle. The expectation remains that overall sales may remain limited if bids do not significantly improve over the next couple of days. Feeders may have a hard time forcing packers hands to shift cash markets over the next week.
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| 2) |
Moderate gains are developing in boxed beef value as increased support is seen in choice and select cuts during early July. The potential for additional gains is expected to add market support to the entire complex over the next couple of weeks.
| 2) |
Limited activity ahead of Thursday's market holiday and early close Wednesday may create increased wide market swings due to light trade interest. This could create additional price volatility through the end of the week.
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| 3) |
Nearby contracts have continued to distance themselves from long-term support levels set last week. This technical shift is expected to spark increased trade volume through the first half of July.
| 3) |
Continued lack of consistent support in wholesale pork values remains concerning through early July. Even though there are firm gains in select pork primal cuts, the variability through the complex and pressure on traditional "summer" products such as ribs and bacon will limit underlying support.
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| 4) |
Continued hope and expectations of increased pork sales to China will be watched closely although the weekly export sales report will be delayed due to Thursday being a holiday. This may spark some increased buyer support before markets close Wednesday.
| 4) |
Firm pressure Tuesday in deferred contracts is causing some underlying concern as traders head into "holiday mode" over the next three days. Very little emphasis is being placed on long-term market direction, with traders adjusting positions ahead of the market holiday Thursday.
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