Light trade in Texas at $106 per cwt Thursday is expected to stimulate underlying cash market support through the end of the week. It is still uncertain just how many cattle sold at this point, but it is expected to be enough to set the general trend of higher cash cattle prices, and likely trickle into firming price levels in Kansas and most of the North. Asking prices still remain firm at $108 per cwt live in the South and $175 dressed in the North. Packer interest is expected to improve in all areas through the morning, although it still may be late afternoon until trade develops. Firm underlying support continues in live cattle and feeder cattle futures through the end of the session with active nearby support helping to spark additional commercial interest through the complex. October live cattle futures remain lightly traded and traders have moved into December futures as spot month trade, but prices closing above the August futures on Thursday at $106.80 per cwt is significant as it has broken through significant resistance and moved to a nearly two-month high. The combination of tighter cattle supplies expected during early 2020 and commercial support moving back into the live cattle complex is helping to spark underlying support in the complex.
Firm pressure on Thursday in nearby contracts is being offset by light-to-moderate long-term support in deferred lean hog trade. The limited sales to China in Thursday's Export Sales report is viewed as generally bearish short term as traders expected more development of sales from China given the rumored 100,000 tons of pork that was talked about over the last couple of weeks and the active buying reported in soybean markets. China continues to need pork in order to stabilize its falling supply levels and curb pork price gains in the country, but the continued focus on trade issues and upcoming trade talks apparently is limiting buying activity. The growing concerns surrounding trade issues and tariffs raised on the European Union adds another wrinkle to overall global trade and the ability to move pork to export markets. Although overall expected impact of exports of pork to the European Union are small compared to the main export customers, it adds even more uncertainty about securing active buying, and increasing the movement of pork to a global market. Cash hog values are expected steady to $1 per cwt higher, with most bids steady to firm. Expected slaughter Friday is at 473,000 head. Saturday runs are expected at 248,000 head.
| BULL SIDE | BEAR SIDE | ||
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Higher cash cattle trade developing in Texas is setting the bar higher for all other areas by the end of the week. Trade of $106 has been reported, a $3 per cwt rally over last week's levels.
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Limited direction in feeder cattle futures through the week has slowly bounced off of early lows but is unable to gain significant support at this point.
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Live cattle futures continue to set short-term highs in all nearby contracts as steady-but-firm commercial support continues to redevelop during early October.
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Boxed beef values continue to struggle to find market stability with prices hovering in a narrow range late Thursday. The inability to bring firm wholesale support into the market will likely limit long-term support in futures trade.
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Active support moved into pork cutout values with a $1.24 per cwt rally Thursday. This continues to rekindle underlying support through the entire complex, sparking underlying stability through the market.
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Continued trade concerns continue to hold a dark cloud over the lean hog futures complex as traders not only focus on uncertainty in China, but now growing tensions with the European Union continue to limit export pork activity.
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| 4) |
Cash hog values continue to show moderate-to-firm support with active packer runs still causing the need to find market-ready hogs. Early bids are expected steady to $1 per cwt higher Friday morning.
| 4) | With less focus on expected export sales to China through the end of the week, the focus in the hog complex moves back to last week's Hogs and Pigs report and larger short-term supply levels. This will continue to remain a bearish undertone through the complex that may limit market support through the end of the year. |
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