Despite the moderate bounce in futures prices, cash cattle prices posted another significant loss Wednesday with light-to-moderate trade developing in most areas at $113 per cwt live basis. At this point, there is still little indication on where dressed cattle trade will land due to sketchy asking prices and bids in that arena. But it would be fair to say that prices in all cash cattle markets are expected to be lower than last week with additional trade likely to follow the midweek lead of $2 per cwt lower. The direction of futures trade and outside market factors early Thursday will likely play a significant role in the overall activity levels of the cash market trade, but the tone seems to have been set for the week. Combined with last week's $5 per cwt losses, the total two-week cash market losses are likely to be settling at $7 per cwt. In comparison, April live cattle futures are currently trading nearly $9 per cwt below mid-February price levels. This indicates that as of now, cash markets have not fully priced in futures losses. The argument can easily be made that if futures trade continues to show firm recovery, the cash market will not fully realize the pressure seen in futures trade and could start to rebound over the next two weeks. But growing uncertainty about consumer habits as more U.S. coronavirus cases pop up on a daily basis could continue to limit the market recovery. With April live cattle nearly $4 per cwt above long-term lows, it is expected that further market recovery will be the focus through the end of the week, but the inability for outside markets, especially the stock market to continue to move higher could quickly squash price support through cattle trade. Wednesday slaughter is expected near 121,000 head.
Fundamental market support is expected to continue to slowly develop in lean hog trade as the week continues, but the uncertainty about how financial markets will respond Thursday morning is creating some underlying concerns of further market pressure. Dow Jones futures are trading lower once again in premarket trade, with a 445-point loss. This follows a strong recovery Wednesday of 1,173 points but adds even more volatility into the market. Traders are now focusing less on domestic pork market activity and more on the potential for China to increase short- and long-term buying patterns. With new coronavirus cases in China still decreasing, the focus is on the overall recovery of the country and how buying patterns improve as the country gets back to a more normal routine. Traders will closely monitor the weekly export sales report for additional sales and shipments to China last week. This could help to solidify additional underlying futures support during the early minutes and hours of trade. Cash hog prices are called $1 lower to $1 higher with most bids expected 50 cents higher. Slaughter Thursday is expected at 495,000 head. Saturday runs are expected at 202,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Strong futures buying support in live cattle futures has initiated a firm market recovery with April futures trading nearly $4 per cwt above last week's lows. The ability to spark additional support to the entire live cattle complex is helping to build increased noncommercial momentum during early March.
| 1) | Strong cash cattle price declines developed Wednesday with live cattle sold at $113 per cwt in most areas. This is another $2 per cwt loss in cash market prices associated with the recent market tumble. |
| 2) | Even though boxed beef values have struggled to post firm gains over the last week, the ability for beef cutout values to remain generally stable, and not follow futures and cash markets lower is impressive. This indicates firm fundamental support still holding in the beef complex despite the volatility surrounding the cattle market. | 2) | Growing coronavirus cases in the U.S. have started to create more focus on consumer activity. A strong push to limit travel associated with work and tourism in the near future will significantly impact domestic beef demand on a short-term basis. |
| 3) |
Strong cash hog values once again developed midweek. This is helping to draw increased underlying support to the entire complex with the focus placed back on potential fundamental market gains.
| 3) | With the hog market focus on the morning export sales report, limited export sales to China will likely be viewed as bearish to the lean hog complex as traders are expecting Chinese buying to start to redevelop. |
| 4) | The weekly Export Sales report will be seen before trade opens. Traders are looking for moderate export to sales to China and other normal trading partners, which will indicate that life is getting back to normal in China and other Asian countries. | 4) | Aggressive pork production in the U.S. will continue to be a challenge to spark aggressive buyer support even if moderate-to-strong buying is seen from export partners. This could keep markets trading in the lower half of the trading range through the first half of the year. |
 |
| #completeherdhealth |
No comments:
Post a Comment