Activity levels in cash cattle trade is expected to be generally sluggish as bids and asking prices are likely to remain unavailable through most of the morning and quite possibly most of the day. Although packers are expected to have entered the week short bought, which is a natural state for packers in most cases, they continue to buy hand to mouth in order to fill needed procurement levels despite the ability to secure additional negotiated trade the previous week before. With increased buying the last couple of weeks for delayed delivery, less emphasis is being placed on weekly trade and the pressure for active trade to develop in all areas. Futures trade is expected to open mixed to mostly higher with follow-through buyer support lingering following the bounce higher in Monday's session. The ability to establish short-term support in live cattle and feeder cattle trade through the rest of the week would be huge in sparking underlying buyer support during early August. Outside market direction is expected to be the main focus through most of the week as the growing concerns surrounding trade with China and the latest tariff announcements will continue to spark uncertainty through the complex.
Wide-ranging price swings have continued to develop during early-week trade. But the bounce higher in nearby contracts, and ability to close spot contracts higher Monday, is a huge market reversal following the unchecked market tumble the last couple of weeks. The underlying tone of the market still remains bearish, with traders focusing on underlying pressure due to lack of export market and continued trade relations with China that have gone from bad to worse in the last week. The gloomy outlook for a speedy resolution to the ongoing trade war continues to put pressure on lean hog trade. Add to that the growing argument of whether China is or is not holding up to its end of the bargain to purchase U.S. ag commodities is sparking increased underlying weakness. But with the hog complex extremely oversold, there continues to be less and less downside risk given the firm domestic demand for pork. Cash bids are expected $1 to $2 lower with bids scattered through the range. Expected slaughter Tuesday is at 473,000 head. Saturday runs are expected near 40,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Strong gains developing late Monday in feeder cattle trade sparked underlying support redeveloping through the complex at or near $140 per cwt. This could help to stimulate additional commercial buyer activity as traders focus on potential long-term growth in beef trade through the end of the year.
| 1) |
Recent market pressure continues to keep buyers cautious in all cattle trade. The underlying financial market weakness is a significant threat to being able to rally beef values through the end of the year.
|
| 2) |
Strong triple-digit gains in select beef cuts Monday sparked underlying support in beef values, helping to put the focus on firming demand through late summer. With Labor Day holiday orders starting to develop, the underlying support in the beef complex may continue to shift higher over the next few weeks.
| 2) |
Strong early-week gains in corn futures sparked additional uncertainty of long-term supply levels and production costs for most cattle producers. Increased focus will be placed on the corn market the next couple of weeks surrounding USDA crop reports and updated planting surveys.
|
| 3) |
Active buying moved into lean hog trade Monday as traders focus on the oversold nature of the complex. This is creating increased opportunities over the near future for additional market corrections to develop.
| 3) |
Lean hog futures remain bearish with prices at or near long-term lows following the pressure over the last couple of weeks. This could add increased underlying pressure in the entire complex.
|
| 4) |
Over all of the bearish clamoring and noise of trade war issues, global pork demand continues to grow, and with African swine fever, it is harder to meet that demand than ever. This creates opportunities for U.S. pork production to move product not only into the China market, but supply many other countries with needed pork.
| 4) |
China's yaun continues to tumble lower through the week as China has allowed its currency to break through additional support levels in relation to the U.S. dollar. This may continue to weigh on all financial markets, limiting underlying support to lean hog futures as well.
|
 |
| #completeherdhealth |
No comments:
Post a Comment