Live cattle held up well on Friday, but the market may have run out of steam for the time being. Fundamentals do not seem to support a continuation of the uptrend that had been evident for two months. Lower boxed beef prices on Friday may keep packers hesitant to step into the market early this week. As usual, business is not expected until later in the week once a few days of futures trading and cutout values are under the belt. Show lists are not expected to be distributed yet today. Futures charts look more like the market may be developing a sideways trading pattern which could keep cash steady at best.
The renewed optimism over U.S./China traded talks that pushed the Dow Jones Industrial Average to a record high on Friday, did little to stem the bearish tide of hogs. The December contract set a new low for the move and appears to be heading to close the chart gap remaining September 11. The gap would be closed at $61.75 and not far from the low on Friday. The market has moved back into a bearish format. Stronger pork cut-outs may provide some support, but the trend will need to continue in order to change the attitude of traders.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cattle futures may be consolidating before resuming the uptrend. Prices seem to be supported underpinned by good demand. | 1) | Cattle price charts could indicate the uptrend has run its course with market moving in a sideways pattern at best. |
| 2) | A steady market should keep buyers bidding at the same prices as last week, giving feedlots the confidence to hold for higher cash. | 2) | Weaker cutouts should keep buyers on the defensive and less willing to bid aggressively this week. |
| 3) | Hog futures should have limited downside due to cutouts improving on Friday. This, and two days of heavy selling pressure, should result in some short-term bottom picking by traders. | 3) | All lean hog contracts still have futures chart gaps remaining under the current market. Gaps generally are filled at some point during the life of the contract. |
| 4) | Retail pork prices have been running above levels of last year since March. This should translate into stronger cash in time once slaughter numbers moderate. | 4) | Plentiful hog numbers continue to be available to the market keeping packers confident with supply and placing bids at lower prices. U.S. and China trade news is old news and has been a disappointment for quite some time. Export demand has not improved as anticipated. |
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| #completeherdhealth |
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