The surge in futures prices and beef values sparked limited midweek cash trade at $111 to $112 through the South with most trades at $112 per cwt. This is $2 per cwt higher than last week. The ability to continue the upward march in cash prices continues to spark some additional underlying buyer interest, as asking prices remain firm at $115 live in the South and $182 in the North. There seems to be little indication that feeders are willing to back away from the elevated prices put on cattle at this point, given the increased packer margin that continues to be built into the complex over the last couple of weeks as beef values have continued to surge higher during October. One of the biggest unknowns is if packers will try to get cash trade done yet Thursday before moving into the month of November, or will they do the bulk of buying on Friday, putting it on November's books? Futures buying is expected to be renewed following strong support in live cattle and feeder cattle futures Wednesday. Even though nearby contracts have posted new short-term highs for this rally with December closing at $118.30 per cwt Wednesday, the ability for feeder cattle to break out of the previous market range with November futures moving above $147 per cwt is sparking increased underlying support through the entire complex. This technical breakthrough in nearby feeder cattle futures is expected to stimulate additional underlying support through the end of the week. Thursday slaughter runs are expected at 117,000 head.
Strong moves late Wednesday helped push nearby lean hog futures away from short-term lows, although the underlying tone of the market still remains generally weak. Spillover support from the aggressive moves in cattle trade at midweek is expected to spark some additional underlying strength as traders focus less on what could happen in trade talks with China and more on underlying short-term demand that continues to remain generally good. This is not expected to spark aggressive long-term gains until more clear direction is seen regarding export trade with China, but the focus on holding prices above technical support is building through the end of the month. It appears hog trade is finally getting tired of the "on again, off again" tone in recent news stories about the development and potential signing of a partial trade agreement next month. But the point is that the direction of short-term lean hog prices is contingent on gaining increased access to China's pork demand following the continued supply issues due to African swine fever. Cash hog values are expected to be steady to $1 per cwt lower, with most bids expected $1 lower. Expected slaughter Thursday is at 490,000 head. Saturday runs are expected at 235,000 head.
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Strong cash cattle support has developed in parts of Southern cattle country at midweek, sparking increased expectations of additional gains through the end of the week. This continued support follows strong upward moves in futures and wholesale beef values.
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Despite technical support in cattle futures, the air is getting thin at these price levels and the market could quickly change course, creating the potential for a moderate and swift correction in the near future.
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Select boxed beef values surged $3.10 per cwt higher Wednesday, narrowing the choice to select price spread by over $3.50 per cwt in one day. The underlying support in wholesale beef values through late October is sparking increased support as traders expect tighter supplies in the months to come.
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With October contracts expiring, a wide gap is left between October and December futures. Can cash prices adjust higher to December contract levels or will the underlying futures trade revert back to cash price levels over the next couple of weeks? As December takes over as official front-month contract we may see increased softness through the entire complex.
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Lean hog futures trade broke away from the compelling weakness still developing in cash and wholesale pork markets. This move higher is helping spark additional end-of-month buying as cattle market momentum spilled over in hog trade. This may help rekindle additional late-week buying Thursday morning.
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Continued cash market pressure is slowly but steadily developing through the entire complex. This is limiting fundamental support through the entire market despite midweek gains in futures trade.
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Traders are eagerly looking toward the morning release of weekly export sales reports. The hope and expectation of increased China purchase at the end of last week is creating some momentum in nearby trade.
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With meetings in Chile canceled due to violence in the country, questions remain as to when and where China and the U.S. presidents will meet concerning the partial trade deal that was expected to be signed during November.
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| #completeherdhealth |
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