Cash cattle markets remain at a standstill Tuesday morning. Any other week, it would be expected that packer bids and asking prices are undeveloped on Tuesday as both sides seem content to wait until midweek or later before stepping into the complex. But with Thanksgiving holiday on Thursday and both sides desiring to accomplish trade before the break and not have to return Friday in order to fulfill procurement lists, interest from both sides is expected to quickly develop over the next two days. The firmness in futures trade Monday helped to create a sense of stability through the complex following last week's market tumble, especially in feeder cattle trade. But the focus is now moving toward the limited trade volume through the rest of the week and potential winter storms developing in much of the upper Midwest. The change in weather conditions is not only expected to impact overall movement of cattle, but daily gains will likely be significantly hindered due to snow and cold weather conditions. The firmness in wholesale beef values, helped to create some sense of relief following the pullback in prices through the end of last week. Traders are focusing on the ability to continue strong underling support in wholesale beef values and generally strong domestic demand through the end of the year. Although tighter overall supplies are still expected through early 2020, the volatility associated with holiday trade could add increased and potential wide market swings over the next couple of months. Tuesday slaughter runs are expected at 118,000 head.
Market stability in lean hog futures complex helped to create a sense of support through the entire complex during early-week trade. Given that overall volume and trade interest is expected to remain limited through the holiday week, price levels have a potential to make erratic and sharp market swings without logical fundamental backing. In other words, price shifts over the next few days don't always make sense from a market perspective due to the low volume of activity in the complex. This is being countered by traders attempting to build off of last week's market lows, and so far remaining successful at sparking limited to moderate buyer interest through the upcoming holidays. Strong holiday demand continues to be seen with local meat cases doing their best to add a ham to the shopping list for the Thanksgiving meal. The ability to continue to spark moderate to strong wholesale pork support is expected to stimulate additional stability over the next couple of days. The expected winter storm systems moving through much of the country is not expected to heavily affect overall production levels as most hogs are raised indoors, but large snow amounts and closed roads may limit the ability to move hogs to packing plants, potentially affecting overall slaughter numbers through the week. Cash hog bids are expected to steady to $1 per cwt lower with most bids steady to 50 cents lower. Slaughter Tuesday is expected at 488,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Firm support in wholesale beef values redeveloped during early-week trade, helping to spark additional underlying interest through the entire complex in what could be a sluggish rest of the week. | 1) | Limited holiday-week trade activity is expected to create some uneasiness through the entire complex. The lack of volume often keeps markets from moving in a rational manner, sometimes allowing for wide market swings with limited to no warning. |
| 2) | Sharp gains in feeder cattle futures quickly pushed prices above $140 per cwt. If current support holds over the next couple of days, this move may have established technical support levels at $139.27 per cwt in spot month contracts allowing for increased underlying support to rebuild through the upcoming sessions. | 2) | The expected winter storm will not only affect production and on farm activities, but the potential to limit holiday travel could have a significant impact on overall meat demand through the end of the week, impacting beef clearance as well as turkey and pork demand. |
| 3) | Light buying developed during early-week trade. The move higher had less to do with actual price changes, and more to do with the ability to push prices consistently higher. Continued support through the week and the ability to place distance between last week's lows will continue to spark underlying support through the entire complex. | 3) | Overall uncertainty when it comes to short and long term export sales to China continues to keep markets on edge. Even though overall pork production continues to be heavily affected in many Asian countries, the question if these countries will replace it with imported pork is still uncertain. |
| 4) | Wholesale pork prices continue to firm ahead of the Thanksgiving holiday. Domestic demand for pork continues to remain strong with increased demand likely to continue to build through the holiday season. | 4) | The inability to move prices sharply away from recent support levels is creating concern that buyer support and market momentum may be limited during the holiday week. |
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