Cash cattle activity is expected to remain quiet early in the week with packers and feeders coming back from the weekend to do normal business despite the aggressive outside market pressure developing across the complex. Typical showlist distribution and inventory taking is expected to be the main order of business with asking prices and bids unlikely through the day. Although the continued widespread pressure in the market may cause some panic selling, it is likely that both sides will likely wait until later in the week to see if overall stability can develop in the near future. The strong price pressure in cash and futures markets last week is creating expectations that additional softness may further develop in all livestock trade, leaving traders very nervous. Futures prices are expected lower, but with prices already at contract lows after Friday's sharp losses, there is little indication just how active losses will be at opening bell. Given the aggressive pressure in global markets and losses over 1,200 points in Dow Jones Futures trade early Monday morning, limit losses are not unlikely in live and feeder cattle. Continued fears of coronavirus has created panic selling as U.S. cases rose above 500 over the weekend. Monday slaughter is expected near 120,000 head.
Outside market selling continues to be the main driver of livestock trade as lean hog futures find themselves strapped into the tumbling roller coaster actions due to coronavirus losses. Additional pressure in tumbling oil prices is likely to spark weakness in the hog complex. Lean hog and pork prices have been the best performing livestock market through this last round of coronavirus-led losses. But it is unlikely that gains will be able to develop due to the aggressive losses expected in the stock market and most other trade as traders become concerned about the spread of the virus and what it will continue to do to domestic and global demand. Cash hog prices are called $1 lower to $1 higher with most bids expected 50 cents to $1 lower. Slaughter Monday is expected at 493,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Boxed beef values have been able to weather the aggressive pressure in futures trade as domestic demand continues to clear current production following higher boxed beef values through the end of last week.
| 1) | Aggressive triple-digit losses late last week continues to leave traders unwilling to step back into the complex. This could leave markets unsupported early in the week. |
| 2) | Despite the aggressive futures and cash market losses in livestock and most other markets, the focus on recent pressure is expected to be short-term based and will likely recover following the intense coronavirus selling currently developing. | 2) | Sharp losses in stock market futures point to another round of aggressive and market wide losses Monday morning. This could easily cause aggressive liquidation in all livestock trade with limit losses a strong possibility. |
| 3) |
Lean hog futures to this point have held well, with moderate-to-strong gains developing last week despite aggressive losses in most other markets.
| 3) | Concerns that widespread outside market losses will quickly derail the recent support in lean hog futures trade could quickly send hog prices tumbling lower based on global coronavirus concerns. |
| 4) | The rebound in lean hog futures trade last week may be a roadmap to other commodity and financial markets on how to respond to the coronavirus-led market losses over the last week. Hog futures posted the most intense pressure in late January and early February based on China's outbreak of the virus, indicating that a market low may have been set as China returns to a more normal level following the virus lockdowns. | 4) | There remains growing uncertainty in domestic pork demand as panic buying by consumers focus on staples like toilet paper and water at local stores. This could limit short-term movement of pork product in most meat cases over the near future. |
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