Cash cattle activity remains at a standstill with the few cattle traded in Iowa Tuesday not enough to establish a good market test. Sharp increases in asking prices of $108 live in the South and $175 dressed in the North make it very clear that feedlot managers are looking for and expecting another strong shift higher following gains over the previous two weeks. The tone of the market appears to have changed slightly, given the strong pullback in feeder cattle and lean hog trade, while live cattle contracts have shown little life over the last couple of days. The "deer in the headlights look" may be a good way to describe the movements in live cattle futures during the week as traders continue to wait for additional direction from either outside markets or overall fundamental shifts. There is potential to bring some renewed stability to feeder cattle futures as early morning corn trade has broken away from the firm follow-through gains. This will likely bring a combination of selling pressure and short-covering through the morning hours.
Sharp pressure in lean hog futures has broken away from the momentum seen early in the week. The optimism about aggressive Chinese buying support appears to have been dashed with little additional talk about China buying pork after Monday's session. Although the soybean market continues to see underlying support and likely interest from China purchases, pork markets may have fallen through the cracks with this latest round of purchases, and this is causing traders to rethink previous market optimism. Last week's bearish Hogs and Pigs report is also likely to have played into Tuesday's losses, as Monday's moves quickly swept over any bearish supply news with expectations of aggressive export business to China. Ultimately, if China steps into the pork market, the recent short-term bump in supply levels can be overlooked. But if China buying remains elusive, traders will move back to trying to manage larger supplies with discounted hog prices. Cash hog values are expected steady to $1 per cwt higher, with most bids steady. Expected slaughter Wednesday is at 488,000 head. Saturday runs are expected at 245,000 head.
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Limited support in boxed beef pointed to wholesale meat stability during early October. This may bring additional firm gains into boxed beef prices through the end of the week.
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Feeder cattle futures reversed course through the last two trading sessions, sparked by aggressive corn buying activity. This move may establish short-term resistance levels back near $143 per cwt following the latest market tumble.
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Feedlot managers are pointing to firm gains in asking prices through the week. The expectation is that continued cash market support will develop despite early pressure in futures trade based on expected tighter supplies through the end of the year.
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Limited support in wholesale beef values is giving little confidence to the entire cattle complex that stronger demand will develop over the next couple of weeks.
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Strong upward movement in pork cutout values is helping to firm packer margins, and focus on improving overall pork demand through the first part of the fourth quarter.
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Near-limit losses Tuesday quickly backed away from previous market optimism as traders once again allowed export concerns to consume overall trade direction.
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| 4) |
The potential of increased pork sales to China remains as traders continue to hope for increased demand support over the next couple of weeks.
| 4) | Little to no new information concerning China buying pork surfaced as the week progressed. This sparked active selling on the concern that expected large pork sales to China may not be taking place. |
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