Following cash cattle trade that developed over the last two days, the lion's share of needed cattle sales appear to be already in the books. This is somewhat unusual during a "cattle on feed report week" as typically both sides are more focused on the direction of cattle inventory levels and placements before becoming moderately aggressive. The current tight supplies of cattle available and need for packers to secure cattle numbers for the upcoming weeks sparked early trade. But steady money at best with last week was all that could be seen as trade in the South continued at $124 per cwt live basis. Dressed trade in Nebraska held out until Thursday afternoon with prices at $198 to $199 per cwt, generally steady to $1 lower than last week. When all the dust clears, it is expected that cattle markets will remain steady for the week, which creates concerns that the much anticipated tight supplies of cattle through the first quarter of the year have been unable to show any significant support during January. Futures trade is expected weak early Friday morning as traders still remain concerned about the aggressive triple-digit losses that flooded the market Thursday. This will likely bring about a combination of follow through end of the week selling pressure and late week short covering, which may lead to moderate to wide shifts in trade as traders look for additional direction from the cattle on feed report Friday afternoon. Friday slaughter runs are expected near 121,000 head.
Lean hog futures firmed in nearby contracts Thursday as traders are now focusing on maintaining higher price moves for the week if the previous gains can hold through the session Friday. Underlying support is slowly developing through the complex as traders look for increased direction from the holiday delayed weekly export sales report. Although there is no indication that aggressive support stemming from the signed trade deal with China will yet make a significant impact in the market, increased export sales numbers would indicate increased interest moving forward. The fact that African swine fever in Poland is inching closer to Germany continues to be a major story to watch as Germany is currently a major pork exporter to China, and African swine fever in Germany would change the export playing field significantly. Cash hog prices are called steady to $1 higher with most bids expected steady. Slaughter Friday is expected at 491,000 head. Saturday runs are expected at 335,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Strong underlying beef demand continues through early 2020, which is likely to help support overall cash and beef values in the coming weeks. This may allow for increased overall movement as packers remain focused on meeting commitments through the winter and spring months. | 1) | Sharp triple-digit losses flooded cattle futures Thursday. This sparked growing uncertainty through the complex as live cattle contracts are testing support levels set in late 2019. A move below these levels would spark technical weakness, breaking out of the sideways pattern that has held the complex over the last couple of months. |
| 2) | Traders are looking for a strong bounce in cattle marketing in Friday afternoon's cattle on feed report. This may help spark market stability through the end of the week despite previous pressure in futures trade Thursday. | 2) | The inability to demand higher cash cattle trade during the month of January is causing concerns that additional long-term pressure may develop through the entire cattle market during the upcoming weeks. |
| 3) | Strong support in lean hog futures Thursday is helping to create increased buyer support through the end of the week. The move higher Thursday points to a weekly gain on the charts, creating expectations that a market low may have been set over the last two weeks. | 3) | A export sales report without increased export shipments to China Friday morning is expected to create underlying pressure through the entire complex. This may cause increased widespread pressure through the entire complex at the end of the week. |
| 4) | Traders are looking for positive export sales news in the morning report Friday. Not only are traders looking at the entire report to make sure all of the usual customers stepped up to the plate last week, but China sales will be a significant focus as this could give an indication of the attitude of buying developing following the signing of the phase-one trade deal. | 4) | Packers continue to be faced with large numbers of market-ready hogs at their disposal. Although packer slaughter rates continue to remain near capacity, the outlook that current production levels will keep hogs readily available, limiting cash market support over the near future. |
 |
| #completecalfcare |
No comments:
Post a Comment