Limited trade developed late Friday afternoon with both sides unwilling to actively jump into the market until next week. The combination of bearish market psychology and pressure in futures has caused additional pressure to cash market interest at the end of last week. Although packers will remain short bought, the overall focus on additional market moves the next couple of days could create additional uncertainty in cash markets. Most of the interest Monday morning will be focused on new showlist distribution and inventory taking. The reported Tyson plant fire late last week in Garden City, Kansas, is expected to limit early week production levels, but cattle are expected to be moved to other plants over the coming days in order to pick up a portion of the lost production. Futures are expected to be mixed with recent pressure in feeder cattle expected to focus on the direction of corn markets before and after the USDA crop report late morning. Limited volume is expected in live cattle futures, which will likely keep prices hovering in a narrow range.
Firm follow-through buyer interest is expected during early trade with increased focus on additional follow-through buying likely. Underlying commercial interest will continue the next couple of days as traders try to regain market support as additional support is moving back into the complex. The pressure Friday in October and December contracts is likely to help realign longer-term buying activity in the near future. Cash bids are expected steady to $2 lower with most bids $1 lower. Expected slaughter Monday is at 474,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Light support in live cattle futures last week is bringing needed stability to the entire complex. October futures remained unchanged Friday. This helped to keep prices above short-term support.
| 1) |
Sharp late week losses in feeder cattle trade is creating additional downward movement possible through the end of the month.
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| 2) |
Expected short-term beef demand is expected to ramp up ahead of the holiday weekend. This should help to stimulate additional cash market interest through the end of the month.
| 2) |
The potential volatility in grain trade ahead of and after the upcoming USDA crop report could lead additional liquidation in feeder cattle and live cattle trade.
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| 3) |
Active gains in deferred lean hog futures have pushed prices $6 per cwt last week. This is building longer-term buyer support in mid-August.
| 3) |
Limited late week pressure in nearby lean hog futures is creating additional weakness in the complex.
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| 4) |
Sharp gains continued to develop in pork cutout values at the end of last week, sparking additional expectations of additional fundamental support through the entire pork complex.
| 4) |
Cash hog prices continue to tumble lower as packers watch the volatility in futures and focus on margin stabilization.
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