Cash cattle trade remains quiet going into Thursday morning with initial bids in the South on Wednesday getting little interest at $105 per cwt. This is well below asking prices of $110 live in the South and $175 and higher dressed in the North. The direction of futures trade the next couple days will play a significant role in the ability for feeders to hold these elevated asking prices and potentially narrow the gap with higher cash cattle prices once the dust settles at the end of the week. Given the attention on the trade talks and developing winter storm, cash trade may not develop until sometime Friday. A lot of attention is being placed on this active storm developing, which is expected to dump between 2 and 3 feet of snow on the Dakota's before it is all said and done. This storm will have more of an impact on cow/calf operations, than cattle feedlots unless the storm path deviates to the south over the next day or two. But this is also expected to create more transportation issues when related to market moves through the entire Midwest region than impact to overall animal production or health. The aggressive surge in feeder cattle futures created a technical market shift with nearby contracts breaking above September highs and closing at the highest live since May. The underlying support based on longer-term supply tightness expected through the entire cattle complex, could gain additional legs through the upcoming days and weeks in order to take advantage of this bullish technical move. Live cattle futures continue to remain stuck near the ceiling of the long-lasting sideways trading range, with limited interest shown so far to break through resistance levels. Thursday slaughter runs are expected at 117,000 head.
Despite the growing pessimism in the news concerning the potential for positive developments in the trade talks with China, the market continues to indicate positive market expectations at this point. With trade talks starting Thursday, and it being well noted that this round of talks has brought with it high ranking government officials that have been absent at most if not all the previous talks, there are expectations that both sides are showing they are not messing around. The lean hog market has continued to show significant underlying gains the past two trading sessions with traders looking for potential market developments in the near future. Traders are also focusing on the morning Export Sales report, with hopes and expectations that pork trade to China trickled into the market in order to help to create a "goodwill" factor to China heading into the trade talks. Although hog production will be little impacted by the developing storms moving through the Dakota's and Minnesota, the major impact will be seen in transportation. Temperature conditions will not be as much of a factor as the ability to get through roads, and get to barns to load out hogs over the coming days. This will continue to impact the ability to maintain aggressive packing plant runs through early next week. Cash hog values are expected steady to $1 per cwt higher, with most bids $1 higher. Expected slaughter Thursday is at 482,000 head. Saturday runs are expected at 286,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Active support quickly and aggressively swept through feeder cattle trade Wednesday, sparking increased momentum as nearby contracts broke through resistance levels. The underlying focus on tighter supplies through the upcoming months is helping to bring additional buyer momentum to the complex.
| 1) |
Packer interest has been limited so far this week with bids undeveloped in the North and showing a wide gap below current asking prices in the South. Packers are likely to wait to see how the storm will impact northern feedlot country before making their last attempt at buying cattle. This could push cattle trade into late Friday afternoon.
|
| 2) |
The continued premium in deferred live cattle futures is focusing on additional long-term support. With most of the weekly gains squarely planted on 2020 contract months, the expectation is that increased long-term support will develop through the cattle market.
| 2) |
Nearby live cattle futures have been reluctant to show active futures support through the week with deferred contracts and feeder cattle trade doing the heavy lifting. This could limit additional end-of-the-week support through the entire complex.
|
| 3) |
Growing support in lean hog futures continues to move prices well off of short-term lows. The focus on long-term trade expectations is developing as trade talks with China start Thursday.
| 3) |
There is pressure in wholesale pork values, but the underlying weakness in pork prices given current supplies and aggressive processing schedules could quickly limit support in futures trade.
|
| 4) |
Traders are anticipating at least moderate pork sales to China in the weekly export sales report released Thursday morning. This will continue to explain the potential for trade with China with or without a trade deal following this round of talks.
| 4) | The hog complex, has a lot riding on the developments coming out of trade talks with China this week. As trade talks start Thursday morning, it is expected that lean hog futures will be sensitive on any potential message coming out of the meetings. This could spark wide-ranging market swings in either direction, based on limited overall information. |
 |
| #completeherdhealth |
No comments:
Post a Comment