Cattle futures just could not break out to the upside after a few days of consolidation. At least, many believe it is consolidation. However, the market may have run out of steam with strong potential for the market to establish a top. Futures are overbought and cut-outs may be wavering. A market cannot go up forever without a correction. Retail demand may be saying "enough is enough." The Tyson plant that was damaged by fire in August is expected to be in full operation by mid-December. This will not have any impact on the market due to overall slaughter not really affected much after other facilities took up the loss of capacity. There was no trading activity yesterday as expected with no bids or offers officially posted. Strong beef export sales provide support to the market with the export sales report on Friday showing the largest weekly export sales total since April 11 and the second-largest for the year.
Hog futures have ended a fourth-consecutive day of losses in deferred contracts. Long liquidation has again run rampant with traders blowing out of position fueling the bearish fire. The market just cannot seem to get a break and is intent on closing the chart gaps left from September. Deferred futures contract fell below chart support increasing the technical bearishness. The disappointment of the news over the inability to finalize a Phase 1 of a U.S./China trade deal weighs heavily on the market. China continues to purchase pork, but not to the level expected. The export sales report on Friday showed China as being the largest buyer for the week ending November 7. Cut-outs are showing positive movement and increasing prices.
| BULL SIDE | BEAR SIDE | ||
| 1) | The ability of cattle to hold somewhat steady today increases the likelihood that futures are in consolidation with the resumption of the uptrend a strong possibility. | 1) | The longer the market consolidates, the more likely it will sell off. Traders will liquidate positions due to the inability of a resumption of the uptrend. |
| 2) | The weekly Commitment of Traders report showed funds adding to their long positions as they trade with the trend. As long as they remain confident of higher prices, the trend is up. | 2) | The overbought status of the market as well as the upcoming Cattle of Feed report due out on Friday may result in some baling out of long positions. There is some expectation of a significant increase of placements. |
| 3) | After four days of heavy liqudation, the hog market is ready to bounce. Buyers may take advantage of lower prices. Funds added to their long positions last week on the decline and may have added again yesterday. | 3) | China continue to express some concern over conditions of the Phase 1 trade agreement leaving the hog market in a bearish posture. China has been purchasing pork, but less than anticipated. |
| 4) | Positive cut-out prices may bring buyers back into the market more aggressively. Any resolution to the U.S/China trade situation would rally the market substantially in a short period of time. | 4) | Deferred hog futures contracts breaking below chart support today opens the |
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| #completeherdhealth |
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