Limited cash cattle interest is expected over the next couple of days as showlist distribution and inventory-taking will likely consume most of the activity Monday. After continued pressure last week, the focus is on regaining market support while navigating the short- and long-term impacts of the beef market due to the coronavirus. Even though cash values have not had the aggressive losses that developed in futures trade, the potential move higher in futures early in the week could quickly spark renewed cash market stability through the first week of March. Futures trade is expected mixed to moderately higher. Given the overall uncertainty of the potential impact on the overall economy, it is still unclear how much widespread pressure will develop as traders are concerned of consumer buying habits changing quickly. But the aggressive losses last week that pushed April live cattle futures over $10 per cwt lower last week alone should bring buyers back into the live cattle and feeder complex. Monday slaughter is expected near 121,000 head.
Limited morning market volume is expected in lean hog trade early Monday as traders look for direction from outside trade indicators and renewed news of additional cases of coronavirus in the U.S, and other major trading partners continues to lead the focus of uncertainty through the complex. Compared to the total population, the number of coronavirus numbers is still extremely low, with 88 confirmed cases reported in the U.S as of Sunday. But the fact that two deaths have been reported is creating even more uncertainty when it comes to overall health concerns and market uncertainty. Even though new cases are being reported in China, the amount of new cases is slowing significantly, which is helping to control the spread of the virus, and many are getting back to a normal business schedule. With April lean hog contracts still holding above January support levels, there is limited technical pressure in the complex at this point, although the market remains oversold going into the month of March. Cash hog prices are called 50 cents lower to $1 higher with most bids expected steady to firm. Slaughter Monday is expected at 495,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
With the strongest beef demand season just around the corner, traders are looking for a speedy recovering to not only live cattle futures, but overall financial markets following last week's liquidation. This could create firm buyer momentum from commercial and investment traders over the near future.
| 1) | Live cattle futures continued to post aggressive losses late last week. This set new contract lows, creating growing uncertainty through the entire cattle market going into the month of March. |
| 2) | Live cattle and feeder cattle futures remain technically oversold. Given the recent market losses have had little to do with fundamental market moves, the potential for aggressive triple-digit support to develop in the next few days is growing, especially if firm gains are seen in outside markets. | 2) | The news focus on growing numbers of coronavirus in the U.S. could create even more pressure through meat markets as traders focus on the potential for short-term changes in buying habits as consumers remain concerned about the growing threat within the country. |
| 3) | Coronavirus cases are still developing in most areas of the world. But the rate of increase (new cases reported) in China has slowed to the lowest level since January. This is a good indicator that renewed focus on returning to normal life in China could spark additional buying activity over the near future. | 3) | Pork cutout values eroded late last week, limiting underlying fundamental support in the complex. This could add even more uncertainty to the livestock complex as traders try to build a sense of stability during early March |
| 4) | Pork demand in the U.S. continues to remain strong through the last several weeks, helping to limit the downward pressure in pork prices. This may limit further early week losses in nearby and deferred lean hog contracts. | 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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