Limited activity is expected to continue in cash cattle trade the next couple of weeks. Showlists floated Monday are generally mixed with increased offerings in the South offset by less cattle on lists through the North. The fact that packers have access to October contracts will likely limit the overall need to remain aggressive at the end of the week. Asking prices and bids may start to slowly trickle into the market over the next couple of days, but it is expected that active trade may not develop until later in the week. Sharp losses in feeder cattle trade Monday quickly focused on the aggressive move higher in corn trade following Monday's USDA report. Traders will closely follow outside markets early Tuesday morning with mixed price moves likely in live cattle and feeder cattle trade. Given the recent underlying support slowly developing in live cattle futures, early short covering may quickly develop in nearby feeder cattle trade as October and November futures appear to have gotten caught up in the market momentum of corn markets, while more moderate and stable price shifts through the rest of the cattle market seems to be moderating overall trade temperature.
Limited follow-through support is expected to continue to develop in lean hog trade Tuesday morning. Traders closed the month of September with an aggressive nearby gain as December futures traded near limit gains at one point Monday, and was able to etch out an impressive $2.75 per cwt gain. The focus of the lean hog market quickly turned from the bearish Hogs and Pigs report on Friday to export expectations. Rumors of trade to China is starting to develop, sparking strong underlying support through nearby and deferred contracts. There also continues to be increased hope that trade talks expected to take place next week will bring about positive results, with some hoping that a trade deal will be reached. The mixed movement in commodity markets early in the week and new month on the books, could keep hog futures volatile over the next few days. Cash hog values are expected steady to $1 per cwt higher, with most bids steady to firm. Expected slaughter Tuesday is at 487,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Last week's strong cash close is creating optimism through feedlot managers. This is expected to increase asking prices during the week, with feeders looking to build a firming market trend on the movement over the last two weeks.
| 1) |
Sharp losses in feeder cattle futures once again brought the cattle complex back to reality, showing how outside markets, especially corn trade can quickly change the overall tone and direction of the complex. Double-digit gains in corn prices sparked active pressure in remaining 2019 feeder cattle futures.
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| 2) |
Firm support in 2020 live cattle contracts despite the aggressive feeder cattle losses is helping to put focus on firm buyer support remaining in the complex. This could help to entice buyer support during early October.
| 2) |
Continued pressure in boxed beef values is not the sign cattle traders are looking for moving into the month of October. The inability to sustain wholesale beef values is expected to quickly limit further cash or futures market support over the near future.
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| 3) |
The sharp Monday rally in nearby contracts helped to build on the active September gains. December lean hog futures gained $9.22 per cwt through the month of September, the largest monthly gain in the duration of the December contract.
| 3) |
Despite bullish market support on Monday, hog market fundamentals appear to still be generally weak given the increased inventory currently working through the system. This could bring about increased selling pressure if export optimism falters even a bit the next couple of days.
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| 4) |
Lean hog futures are trading at two-month highs, going into the month of October. Expected firm demand support through the last quarter of the year combined with increased export expectations is sparking bullish market support.
| 4) | A lot of focus continues to be placed on expected pork sales to China. Both over the near future and the potential of trade deal progress being made during the upcoming October meetings. It is uncertain if overall actual sales will be able to live up to the optimism in the market over the last few days. |
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| #completeherdhealth |
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