Cash cattle activity remains at a standstill with bids and asking prices yet to be well established for the week. If packer activity starts to slow through the middle of February, it may add increased softness to cash cattle prices the next couple of weeks. But the reason for the slowdown is tighter supply of market-ready cattle, which gives feeders significantly more advantage to leverage the cattle they have through the upcoming weeks. Late-week trade is likely once again with both sides unlikely to give in quickly from initial positions when they do step back into the market. Futures trade is expected mixed early Tuesday morning with a combination of short-covering and follow-through selling moving back into the complex. The triple-digit losses in nearby live cattle trade was a gut punch to the market Monday as traders were unwilling or unable to step back into the complex and maintain the narrow market rally from late last week. The overall lack of new short- or long-term market direction across the complex has created limited uncertainty as traders search for price support and potential renewed buying activity through the week. Even though nearby feeder cattle futures etched out a narrow gain Monday, the triple-digit losses in summer and fall contracts cannot be overlooked as traders start focusing on larger cattle numbers expected through the second half of the year. Tuesday slaughter is expected near 121,000 head.
Given the aggressive market rally in lean hog futures last week, prices have a long leash at this point before any sense of technical market indicators are seen. This could allow for another day of mixed price direction through the entire lean hog futures complex. The overall lack of swift moves in cash hog or pork values early in the week is also likely to limit any major changes in fundamental market direction. Demand for pork in China is uncertain due to the coronavirus outbreak and what affect it will have on consumer demand and the logistics of moving pork through the country. At this point, it is still uncertain just how widespread the virus will be and how long it will take to get it under control. Cash hog prices are called $1 lower to $1 higher with most bids expected steady to 50 cents higher. Slaughter Tuesday is expected at 495,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Tighter cattle supplies are expected in the coming weeks. Although at this point, this is curbing packer activity, but a tighter supply of market-ready cattle should help to bring renewed price support to beef values in the coming weeks.
| 1) | Early-week losses in live cattle trade sparked additional market uncertainty in the cattle complex. The inability to hold current price levels through the week opens up the potential for significant technical pressure. |
| 2) |
Strong beef demand continues in domestic and export markets through early 2020. This is likely to help limit continued market pressure over the near future, although daily market volatility is still likely.
| 2) | Boxed beef prices eroded Monday, adding to further concerns of widespread market weakness in the complex. |
| 3) |
Expectations of growing pork demand moving to China as part of the phase-one trade deal continues to bring underlying long support to the complex.
| 3) |
Triple-digit losses Monday has broken the momentum of last week's market rebound. Although long-term support is still likely, growing concerns of short-term demand in China due to coronavirus is limiting nearby support.
|
| 4) | Even though African swine fever has fallen off the radar due to coronavirus concerns around the world, it is premature to overlook the continued effects of ASF on pork production through the remainder of the year. This opens up significant demand support for U.S. pork supplies. | 4) | Pork production in the U.S. continues to grow, which is expected to keep the focus on the need to create aggressive exports to China as well as maintain current domestic and export levels. It may still be hard to outsell the current production levels the next several months. |
 |
| #completecalfcare |
No comments:
Post a Comment