Cash cattle trade remains generally quiet with feeders still holding onto elevated asking prices following the upward trend last week. Having packer bids midweek is impressive and points to positive market support through the end of the week. A few pens of cattle sold in the South at $105 per cwt Wednesday, although the overall amount sold is not enough to establish a market trend, the fact that these prices are higher than last week's average continues to spark positive interest in the complex. The ability for packers to gain access to market-ready cattle for upcoming demand is offsetting current pressure in wholesale beef values, although cattle numbers are not expected to significantly tighten in the near future. The underlying support moving into futures trade late Wednesday helped to create additional commercial market momentum with prices breaking above last week's highs through the end of the session. Although continuing to break through short-term resistance levels continues to be a chore, traders have their sights on early August highs near $111.50 per cwt. A move above this level would likely spark follow-through interest in the entire complex.
Hog futures stabilized midweek, breaking away from the wild and erratic triple-digit moves earlier in the week. This could indicate that market stability is becoming more focused on fundamental market moves. But with the weekly Export Sales report released Thursday morning, this could quickly change by the presence or absence of sales to China in the report. Although traders continue to focus on the upcoming trade talks with China, the expectation that moderate-to-active pork purchasing has or is being done by the country has added to market uncertainty and wild market swings. Traders continue to look for positive moves long term from both supply tightness in hog numbers and long-term trade developing. The U.S. ag and meat industry is accustomed to having a leading role in feeding a hungry world, and the fact that China has made a decision to not utilize our food products hits at the core structure of what American ag producers hold dear in supplying the world with nutritious food products. Cash hog values are expected steady to $1 per cwt higher, with most bids steady. Expected slaughter Thursday is at 487,000 head. Saturday runs are expected at 244,000 head.
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Strong midweek cash cattle bids are pointing to steady-to-higher cash cattle markets as the dust clears at the end of the week.
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Boxed beef values have struggled to show improvement during early October. This could limit follow-through support in cash and futures trade as traders focus on the inability to elevate beef values through the supply chain.
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Strong buyer momentum in live cattle and feeder cattle Wednesday is shaking free from early week pressure, pointing to renewed buyer interest moving into the complex during early October.
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Following early week losses in feeder cattle trade, additional late week gains are needed to rekindle active support through the complex. Traders still remain focused on the elevated corn prices, creating concerns of long-term production costs.
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Traders are still expecting to see moderate-to-firm sales numbers of pork to China in the weekly export report. This would confirm last week's rumors focusing on active buying interest moving through the complex.
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Firm weakness in pork cutout values late Wednesday created concerns that the availability of pork in the system may curb upward price movement in the near future.
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Recent firmness in cash hog values continues to focus on packers' need to find additional market-ready hogs given current packer speed and still impressive packer margins.
| 4) | Despite all of the anticipation of China trade and potential purchases, the lack of confirmation of sales will quickly create additional uncertainty in nearby and deferred lean hog futures over the near future. |
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| #completeherdhealth |
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