Light trade through the South developed
Wednesday afternoon with prices generally $105 per cwt live. This is $5
per cwt lower than last week, and may set the tone for the weekly market
trend given the early week pressure in futures trade. Limited activity
developed in the North with prices around $170 per cwt. The amount of
volume in the North is not enough to establish a good market trend, but
it did get the ball rolling for the week as both sides slowly stepped up
to the plate. Additional trade is expected to develop in the next two
days. Even though packer interest should improve significantly Thursday,
given the volatility in both futures trade and wholesale beef values,
feeders seem to be in little hurry to make deals at the lower price
levels. Futures trade is expected to be generally higher with
follow-through support likely after the midweek rally. Feeder cattle
futures hit limit gains at closing bell, allowing another day of
expanded trade limits of $6.75 per cwt. It is likely that markets will
be much more subdued than Wednesday levels, as traders try to
reestablish more realistic market norms given the lower plant capacity
over the short and long term. Growing concern of overall economic
support and follow-through pressure in stock markets may limit upside
market support through the end of the week also.
Early trade in lean hog futures is expected to
be mixed Thursday morning following strong triple-digit gains in nearby
futures midweek. Continued underlying buyer support is expected through
the end of the week, although the overall tone of the market remains
weak based on overall uncertainty surrounding export pork trade and
prices hovering within the lower end of the trading range. Increased
focus will be placed on the weekly Export Sales report, Thursday morning
before markets open. Traders are not only looking for and hoping for
some additional sales to China, but also focusing on any news of
cancellations or recent shipments of previously-sold pork. The ongoing
African swine fever situation in the country continues to create a need
for pork in China, but the trade issues and current relationship will
continue to be a major barrier to move U.S. pork into China. Cash bids
are expected $1 lower to $1 higher with most bids steady. Expected
slaughter Thursday is at 477,000 head. Saturday runs are expected at
128,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Sharp market support in feeder
cattle trade Wednesday sparked renewed interest in the cattle complex.
This is sparking some additional positive moves in all cattle markets
through the end of the week.
|
1) |
Despite the market shift higher
Wednesday, cattle futures remain at the lower end of long-term trading
ranges. This could limit continued follow-through support through the
end of August.
|
| 2) |
Wholesale beef values have exploded
higher this week. This has significantly improved packer margins the
last couple of days. The improved margins are expected to stimulate all
packers to increase chain speeds in order to take advantage of these
margins in the near future.
|
2) |
Growing concerns of weakness in
domestic and global economic growth could quickly spark limited upward
market support in beef trade as high-end beef product demand
traditionally follows general economic support. This may add even more
uncertainty to cattle trade in the coming days and weeks.
|
| 3) |
Triple-digit gains in nearby
contracts helped renew active support in the complex. Front-month
October futures posted a $2.20 per cwt rally, sparking increased support
in the complex.
|
3) |
Pork values continue to slowly erode
following limited support in several primal cuts. The inability to show
consistent demand growth in the pork complex is causing concerns about
future market suppor.
|
| 4) |
Recent pressure in grain markets is
expected to help stabilize production costs in the near future. This
will improve producer margins even when lean hog futures continue to
show significant price support and hover near long-term contract lows.
|
4) |
October lean hog futures remain at
six-month lows due to uncertainty about exporting pork to countries
affected by African swine fever because it will limit overall demand,
but trade issues with China continue to cloud the air also, hampering an
increase in export demand to many areas in the region.
|
 |
| #completeherdhealth |
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