Cash cattle trade has trickled in over the last two days with most of the business so far in the South. Cash cattle trade in the South is generally $2 per cwt above last week's levels, sparking increased overall support as strength has continued to develop in futures trade. Limited cash trade in the North on Thursday at $160 to $162 per cwt, although these sales would indicate a firmer tone in trade, the amount of cattle traded is not expected to be enough to generate an accurate trend. Futures trade is expected to spark limited follow-through buyer support as traders test resistance levels of $106.10 per cwt in December contracts. A weekly close above these levels would likely spark renewed underlying support through the end of September. Traders are also looking for direction from the Cattle on Feed report Friday afternoon, although given the current estimates, limited market surprises are expected. Cattle slaughter is estimated to remain at 115,000 head Friday.
Light to moderate trade activity is expected Friday morning with limited short-term market interest which developed Thursday creating more needed stability as traders have moved back to a more routine and normal pricing pattern through the end of the week. In general, the market support, which developed last week surrounding growing expectations that trade relations with China will move forward and the underlying need for pork, is holding onto the majority of gains. The ability to hold these price levels through the end of the week is likely to spark additional underlying support through the entire complex during late September. Expected slaughter Friday is at 478,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Expected lower feedlot placements during August appear to be the main focus of the upcoming Cattle on Feed report. This could help to add additional stimulus through futures trade Friday morning as last-minute positioning develops ahead of the afternoon report.
| 1) |
Given the narrow adjustments in Cattle on Feed estimates going into the Friday afternoon report, little overall market impact is expected if reports fall within the expected trading ranges. This could limit direction at the end of the week across all cattle trade.
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| 2) |
Higher cash cattle trade trickling into the complex over the last couple of days is helping spark underlying expectations of further market support during late September.
| 2) |
Despite nearby live cattle futures nearing month-high support levels, recent market pressure still is holding prices below the 40- and 100-day moving averages. This is likely to limit end-of-week support through the entire cattle complex.
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| 3) |
Lean hog futures continue to sustain strong underlying support following last week's market rally. The potential for increased long-term buying demand from China continues to add focus to lean hog trade as end of the week adjustments develop.
| 3) |
Few news reports have developed surrounding any expected progress in the upcoming trade talks with China. This may limit shor- term direction across the complex.
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| 4) |
Underlying support is redeveloping in wholesale pork values. This continues to spark additional expectations of further demand growth through the next couple of months.
| 4) | Ample market ready hogs available to fuel the still aggressive packer appetites have continued to limit support in cash hog values despite the firmness in pork values and higher futures trade. |
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