Cash cattle trade is expected to become much more active over the next couple of days, with packer interest likely to improve through the morning. A few cattle were sold in Nebraska and Kansas Wednesday afternoon, with prices at $103 to $104 in the South and $172 to $175 in the North. Although the numbers sold is limited, the lack of support from last week's levels is somewhat disappointing, and could create bearish market indications through the end of the week. With the Labor Day holiday on Monday limiting procurement levels, and additional contracts expected to be delivered after the first of the month, it is uncertain how many additional cattle need to be bought before the end of the week. This could further limit packer interest or aggressive bidding for cattle in the near future. Secretary Perdue announced Wednesday afternoon that he has directed the Packers and Stockyards Division to investigate recent beef price margins. Following the Tyson plant fire on Aug. 9, plant margins surged as beef values and cattle prices quickly and aggressively moved in opposite directions. It is uncertain the timeline or speed of an investigation. The underlying weakness in cattle futures trade is expected to continue, with prices remaining under pressure. But at current levels, the market remains oversold, creating the potential for a late month rally.
Early trade in lean hog futures is expected to focus on a combination of follow-through buyer support that developed midweek and limited position-taking. The tone of the lean hog complex remains weak given the growing supplies of pork, while cash hog prices continue to find little underlying support through the end of August. But long-term buyer support has trickled into the complex through the week with traders looking at the potential for productive trade talks with China when negotiators meet in September. Prices holding above support levels late last week is creating additional market confidence in the complex. Cash bids are expected steady to $2 lower with most bids $1 lower. Expected slaughter Thursday remains near 482,000 head. Saturday runs are expected at 83,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Upcoming Labor Day holiday demand should help to clear additional beef supplies as the Labor Day weekend traditionally is viewed as the last major summer activity, and typically helps to support additional beef demand.
| 1) |
The inability to significantly move live cattle futures higher and hold them at higher levels through the end of August points to the underlying weakness still developing in the complex. This has the potential to spark additional market softness during early September.
|
| 2) |
The announcement that the USDA will look into cattle margins over the past month, looking for any evidence of price manipulation, collusion or unfair practices, is a relief following the surge in packer margins since the Tyson plant fire on Aug. 9.
| 2) |
Boxed beef values have started to erode slightly from recently elevated levels. This is not unexpected, but the fact that cash cattle and futures trade has gained limited ground in the last couple of weeks is disappointing and could add increased pressure once beef values move back to more normal levels.
|
| 3) |
Moderate-to-strong buyer support has quickly redeveloped in deferred lean hog futures as traders focus on the potential for long-term demand growth despite recent uncertainty surrounding trade agreements with China.
| 3) |
Continued strong underlying pressure remains in cash hog and pork values. The inability to stabilize wholesale pork prices will continue to spark additional market weakness in the complex.
|
| 4) |
Despite the current trade issues with China, the fact that China will continue to need pork supplies to fill its food chain cannot be understated. Pork prices continue to steadily rise in China as overall production levels in the country are expected to fall through the end of the year. This is still bullish for global pork markets.
| 4) |
Lack of positive news in the relationship with China on trade and the upcoming tariffs that are set to start on Sept. 1 keeps a dark cloud hovering over the entire hog market.
|
 |
| #completeherdhealth |
No comments:
Post a Comment