Thursday cash cattle trade posted a few scattered trades at steady-to-lower money than was seen earlier in the week. For the most part, cash business wrapped up, but some clean-up trade trickled into the market over the last couple of days. It is likely that there may not be bids on Friday, but given the market freefall through the week, it is also possible that packers may offer a few low-ball bids in the case that some feeders with cattle still on showlists will bite rather than waiting until next week. The weaker tone of cash markets will be huge going into early March. Fundamental supply levels have had little to do with cash market prices through the last week with the focus based on the plummeting of futures trade and concerns about further weakness in the near future. The fact that cattle futures pulled away from early limit losses Thursday is a good sign that may bring a sense of stability at the end of the week. But live cattle market trade once again will likely be at the whims of outside market direction. With the Dow Jones Index falling 1,190 points at the end of the day Thursday, there still seems to be some strong underlying concerns that further general market pressure may develop before traders back away from the panic button. Friday slaughter is expected near 121,000 head.
Sharp triple-digit losses through the end of trade Thursday sparked renewed technical pressure in the entire lean hog futures trade. Even though lightly traded, and not a good indicator of price direction, May lean hog futures broke through long-term support levels, setting contract lows. Although April and June futures are still holding above lows set in late January, the underlying focus is being placed on widespread demand pressure based on the spread of coronavirus through the world. Market impact has moved away from the virus impact on other countries' economies and their ability to maintain normal daily schedules, and more on the potential impact it would be in the U.S. This is the basis for the widespread market losses through nearly all commodity and financial markets as traders continue to look for long-term indicators of how coronavirus will affect everyday life in their neighborhoods. Long-term demand is not likely to be as heavily impacted as the recent market pressure would indicate, but if outbreaks do continue, the greatest impact is likely to be seen on short-term demand in many areas. Cash hog prices are called 50 cents lower to $1 higher with most bids expected steady to firm. Slaughter Friday is expected at 489,000 head. Saturday runs are expected at 90,000 head.
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Beef market fundamentals have yet to see significant pressure with boxed beef values holding generally stable through the week. This could bring underlying support to the entire market as traders move away from the "panic button."
| 1) | Sharp losses in live cattle futures Thursday once again set contract lows. April futures broke through support levels last week in September, creating renewed technical bearishness through the live cattle futures complex. |
| 2) | Open interest in live cattle trade continues to hold surprisingly well through this latest round of market pressure. This indicates that active commercial and noncommercial support remains interested in cattle markets and will likely step back to the plate once the dust settles. The potential of late-month positioning may help spark renewed interest late Friday. | 2) | The sharp cash market losses this week will be difficult to regain in the near future as packers are starting to look toward larger supplies in the next several weeks. This could change the overall trend of cash cattle markets through the first half of the year. |
| 3) | Cash hog values once again posted light-to-moderate support. This continues to put the focus on the packers need to gain access to market-ready hogs even with currently large production levels. | 3) | April futures led the livestock market lower Thursday with losses of $2.60 per cwt. This underlying weakness in the complex puts even more focus on potential widespread late week liquidation through the entire pork complex |
| 4) | With all the immediate focus on coronavirus and the potential impact to global and domestic demand, it is important to remember that the issues with African swine fever in China and other Asian countries continues to be a major issue. This will continue to create the need for pork supplies that will outlast the recent coronavirus outbreaks. | 4) | Continued strong pork production is expected to continue through most of the year despite the strong trend lower over the last two months. This could continue to add significant losses to many producers through much of 2020. |
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| #completecalfcare |
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