Light cash cattle trade started to develop in the North at $183 per cwt. Although the ability to trade cattle in the North on Wednesday is significant, most of the sales are set for delayed delivery, which is still limiting the ability to set a market trend with these few sales. Packer interest in all areas are expected to redevelop Thursday morning, although at this point, it is uncertain just how many cattle will be sold until Friday. Futures trade is expected mixed to mostly higher in early trade as traders focus on midweek stability, and the expectation that follow-through support may develop as the week draws to an end. Traders will be closely following the direction of outside markets as well as increased underlying support through beef values during the rest of August. Even though economic concerns and trade issues remain a major issue impacting the market, the newness of the latest blows in the trade war with China is fading, allowing traders to return to current fundamental market shifts, which could help to solidify additional longer-term support in the entire complex.
The daily market swings higher and lower in lean hog trade is setting up additional volatility through the complex. If trade direction will continue the weekly pattern, sharp market losses could be expected early Thursday morning. But it appears that the underlying tone of the market is slowly changing, which could quickly break out of the pendulum swinging motion seen in the last few days. Confirmation of more sustained buyer support in morning trade is likely to unleash additional commercial buyer support, which has been unwilling to actively step into the market. This interest could break out of the current pattern, moving prices well off long-term lows and help to regain market confidence through the upcoming weeks. Cash bids are expected steady to $2 lower with most bids $1 lower. Expected slaughter Thursday is at 475,000 head. Saturday runs are expected near 44,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Continued buyer support in wholesale beef values through the week is helping to regain confidence in the ability to move additional beef product and focus on short- and long-term demand growth. This is expected to add further underlying cash market support in the coming weeks.
| 1) |
Live cattle futures still remain near month-long lows as traders try to bring stability into the still volatile market. Given the firm, early summer pressure in the market, live cattle trade remains far from technical support, which may limit additional active support.
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| 2) |
Follow-through futures support in nearby live cattle futures could establish a breakaway from month-long lows, and help to establish a firm short-term uptrend in live cattle trade during the remainder of August. Sustained gains above $106 per cwt in October contracts will be needed to maintain recent market support.
| 2) |
Limited early week interest in cash cattle trade has created uncertainty of cash price direction through the end of the week. This could limit not only the upside market potential the next two days, but outside market pressure may soften the resolve of feedlot managers as they revise asking prices through the end of the week.
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| 3) |
Cash hog trade has increased significantly the last two days, sparking increased overall volume even though prices remain subdued at this point. This active movement by packers likely indicates that the market bottom is near, as packers take advantage of the depressed cash market values.
| 3) |
The daily back and forth pattern in lean hog trade this week is creating additional concerns of weaker price levels Thursday morning. The continuation of the pendulum swinging through the week is bearish for long-term support of lean hog trade.
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| 4) |
Strong triple-digit gains Wednesday is helping to rekindle bullish market hopes. October futures have bounced off long-term lows of $64.85 per cwt. The ability to move away from this level through the end of the week should spark widespread underlying support in the complex.
| 4) |
Strong pressure in cash hog values during the week has created overall market uncertainty despite the stable pork values this week. The potential for additional triple-digit losses in cash prices may limit futures support through the end of the week.
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