Following the moderate cash market pressure last week and long weekend with futures markets closed Monday, packers and feeders are likely to get back into the swing of things as they focus on trade later in the week. At this point, it is unlike there will be any active asking prices Tuesday morning, but they could start to develop through the end of the day as feedlot managers focus on taking advantage of the strong futures market rally last week combined with the bounce in wholesale beef values. There is increased underlying support likely with the expectation that additional beef demand will continue to grow seasonally through the upcoming weeks. Packer bids are not likely to develop until later in the week with active trade expected to be pushed off until the last half of the week. Futures trade is expected mixed in light-to-moderate morning trade. With strong market support at the end of last week, additional bullish support is likely to return to the market, eyeing the oversold cattle complex in both live and feeder cattle markets. But the sharp rally late last week will also create a desire for traders to take profits following the $3 per cwt rally in cattle trade through the end of last week. This may create a wide mixture of price swings early Tuesday due to limited initial trade volume. Tuesday slaughter is expected near 121,000 head.
Limited market activity is expected early Tuesday morning as traders move into the complex following the three-day holiday weekend. There was limited news developments on the pork side from China over the weekend, which is expected to create additional uncertainty about overall demand through the upcoming weeks. But for now, it appears that nearby lean hog futures trade has found the much needed stability following excessive pressure through the month of January. This still leaves the complex focusing on additional long-term gains likely to develop with expectations of growing export demand as the spring months continue. But the focus on moving prices outside the current range will take additional bullish news surrounding reduced coronavirus cases or announcements of pork sales to China in the near future. 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.
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| 1) |
Strong underlying support late last week is creating the backdrop for additional bullish market support moving into live cattle and feeder cattle trade during early-week trade.
| 1) | Given the growing supply of market-ready fed cattle through the upcoming months, live cattle futures will soon meet price resistance levels. This could limit the aggressive market support seen last week as traders look past short-term market gains despite the oversold status of the complex. |
| 2) |
The much needed and anticipated rally in beef values late last week helped to solidify growing fundamental support in the cattle complex. This is expected to point to additional support in early-week trade as traders factor in weekend demand.
| 2) | Strong cash market pressure the past two weeks has created an underlying weak fundamental market. Although the focus on higher asking prices following the futures market rally exist, it is uncertain just how aggressive packers will be following significant weakness in packer margins the last couple weeks. |
| 3) |
Cash hog values rallied nearly $1 per cwt last Friday on the National Direct afternoon hog report. This underlying support in the complex is expected to spark increased fundamental support during the next few days.
| 3) |
Continued concerns surrounding coronavirus issues in China will continue to limit the overall expectation of a strong market rally anytime soon in the lean hog complex.
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| 4) | Long-term demand for pork continues to remain strong as traders focus on the potential to once again expand pork exports to China through the upcoming months despite economic and health challenges within China. | 4) |
Trader's attention quickly shifted to the cattle complex last week. This may continue to be early Tuesday, allowing a lightly traded lean hog market to gain little momentum following the long holiday weekend.
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