Limited cash cattle trade reported Thursday
afternoon fell in line with prices earlier in the week, with markets
steady to $1 per cwt weaker than week-ago levels. There is the potential
for some clean-up trade to develop through the end of the week, but
most negotiated trade is likely to be done for the week as both sides
are expected to remain cautious about stepping into the current market
volatility Friday. Cash cattle prices were generally $111 per cwt in the
South and $183 dressed bid in the North. Futures trade is expected
mixed to mostly lower as underlying weakness surrounding trade issues
with China will create a weaker tone on the market even though beef will
remain less impacted by trade relations with China than other
commodities. The weakness in grain trade that is expected, should have
some underlying support through the cattle complex as traders continue
to focus on lower production costs as grain markets slide lower through
late summer.
Follow-through pressure is expected to redevelop
in lean hog futures as hog markets will likely be impacted on the trade
war with China that has quickly ratcheted higher the past two days. The
announcement by Trump to add a 10% tariff on remaining imports from
China sparked an aggressive and massive market sell-off in stock markets
and lean hog trade late Thursday. Friday, China threatened retaliation
for the move, which will likely significantly hurt any chances of
additional pork moving to China. Even before these announcements, the
cancellation of previous export sales to China reported on Thursday's
export sales report confirmed the overall lack of product movement to
China, which needs pork to fill its domestic demands after African swine
fever has reduced production. Following losses Thursday, technical
pressure is expected to develop also as October futures broke through
long-term support levels, potentially sparking widespread additional
losses across the complex. Cash bids are expected $1 Lower to $1 per cwt
higher with most bids steady to weak. Expected slaughter Friday is at
462,000 head. Saturday runs are expected at 34,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Strong underlying futures support
developed on Aug. 1, potentially helping to establish support near
$107.50, and regain buyer support in the near future based on expected
domestic demand strength through the end of the year.
|
1) |
Strong pressure in feeder cattle
trade Thursday created widespread concerns following gains in live
cattle market and grain market weakness. The inability for feeder cattle
trade to respond positively to these market factors caused significant
underlying concern in the entire complex.
|
| 2) |
Wholesale beef values firmed
Thursday, helping to stimulate additional fundamental confidence through
the entire complex. This may create additional underlying buying
interest at the end of the week.
|
2) |
Outside market factors will play a
key role in driving the direction of live cattle trade Friday. This
could allow for moderate-to-wide market shifts and additional potential
bearishness based on the market's reaction to the latest trade issues
with China.
|
| 3) |
Continued support is seen in pork
cutout values, as traders continue to focus on strong domestic demand.
The ability to sustain current pork price levels will go a long way in
stabilizing the entire complex the next couple of weeks.
|
3) |
Aggressive follow-through pressure
is expected in lean hog trade following a $3.50 to $4 per cwt loss in
nearby trade late Thursday. This late day move, broke through long-term
support levels, and created additional technical pressure in the entire
complex.
|
| 4) |
Lean hog futures remain oversold
following the aggressive move lower the past several trading sessions.
This could allow technical support to redevelop at any sign that selling
interest is fading.
|
4) |
Any hope of hog market relief
concerning trade situations with China was dashed over the last two days
as Trump announced additional tariffs will be placed on remaining
imports from China. The announced retaliation threat by China Friday
morning is not a surprise, as the tit-for-tat moves over the last year
was generally expected by most market watchers.
|
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| #completeherdhealth |
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