Packers have been aggressive in their search for market-ready cattle, but the focus has split between the aggressive recent pressure in futures trade and incredible strength in wholesale beef values through the week. With consumer demand running high, especially for any sign of ground beef product, the focus on moving product through the plant and onto store shelves has helped boxed beef values surge through the week. This stimulated cash cattle trade through the week in a wide and mixed trading range with prices of live cattle at $105 to $113 per cwt, while dressed cattle sold at $168 to $177 per cwt. It is still uncertain where the weekly average will fall, but cattle are sold from anywhere from $7 lower to $4 per cwt higher than last week's average. The timing of cash cattle sales through the week has been important as packers remain focused on gaining additional numbers in order to satisfy current orders that are aggressively building. Futures trade is expected to remain mixed, and could easily see wide market swings similar to Wednesday. The overnight pressure in the Dow Jones futures is being countered by aggressive overnight buying support in most other commodity markets, leaving the livestock open uncertain as most of the initial activity will be triggered by computer-generated trade. All livestock trade is moving back to regular trading limits, as nearby contracts closed below the daily limits Wednesday. Thursday slaughter is expected near 121,000 head.
Activity in lean hog futures trade has separated itself for the most part from the emotional moves in beef trade. But the focus on widespread market swings and overall uncertainty in pork demand on a domestic and global scale has created wide-ranging price swings through the entire complex. Spot April futures have held most of Tuesday's gains during the midweek session, setting prices up to focus on the recent upward swings in pork values. The lean hog complex continues to be much less emotionally driven by the recent COVID-19 issues, although the concern of further demand erosion continues to be a main focus for the entire complex. Deferred futures continue to be most affected in the last couple of days with concerns that the initial demand surge by consumers may subside as the crisis continues. Cash hog prices are called $1 lower to $2 higher with most bids expected steady to $1 higher. Slaughter Thursday is expected at 496,000 head. Saturday runs are expected near 305,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Continued aggressive moves in choice and select beef cuts continue to drive the focus to the aggressive movement of product over the last week. For now, this is offsetting demand damage due to restaurants closing and cutting back available services. | 1) | Sharp triple-digit losses Wednesday in many nearby and all deferred contracts continues to cause concern that the aggressive stock market weakness will continue to have a significant impact on cattle prices over the near future. |
| 2) | The potential for higher cash cattle trade through the end of the week is putting more focus on end beef products, and less emphasis on the downward pressure in futures prices. | 2) | Renewed pressure in stock market futures Thursday morning may add increased seller interest to the live cattle trade despite growing support in most other outside commodity markets. |
| 3) | Aggressive packer activity during the last couple of weeks is helping to limit the tight supplies of market-ready pork to consumers. This is helping to clear the continued large pork production levels, which continue through the spring. | 3) | Traders will closely watch the weekly Export Sales report. With increased focus on most countries closing or limiting border movement, the expectation is that overall export trade will continue to be impacted. |
| 4) | Spot April futures are holding well above support levels set early in the week. The ability to main this level of support through the complex may be enough to rekindle moderate-to-active buyer support in nearby futures trade. | 4) | Sharp losses in summer lean hog contracts Wednesday is moving the focus on the currently aggressive market clearance, and concern that long-term demand erosion may still quickly develop over the coming months. |
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| #completecalfcare |
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