Cash cattle trade became more active Thursday
with light-to-moderate movement seen through most areas. Dressed trade
in the North was at mostly $160 per cwt. This would be about $3 per cwt
above last week's price average. Live cattle was seen in Kansas,
although limited live trade took place in other areas of cattle trade,
but prices fell $3 per cwt from last week at $100 per cwt. With the
release of the monthly Cattle on Feed report at 2 p.m. Friday afternoon,
additional cash market trade may be delayed until after the report
release. Early estimates of the April 1 Cattle on Feed report points to
significantly higher marketing levels through March, while on feed and
cattle placement levels are expected to remain well below year-ago
levels. The wide range in estimates heading into the report shows
uncertainty of how accurate these projections may be when the report is
released. Futures trade is expected to remain mixed, but increased
volatility is likely through late week trade. Even though April
contracts remain generally dead in the water, and not a true reflection
of market activity, the move to limit losses Thursday will allow for
expanded trading limits in the complex Friday. Prices will be able to
move $4.50 per cwt in either direction before being stopped by trade
limits, which may add even more uncertainty. Friday slaughter is
expected at 89,000 head.
Expanded trade limits will be available for
traders in lean hog markets Friday with the limit set at $5.50 per cwt.
This follows the changes during the middle of April, which adjusted
trading limits through August. The shift is an adjustment period that
will set the stage for price limits to be reset annually based on August
futures prices. Even though May contracts remain inactive and not
relevant to market direction, the limit move in the May contract
Thursday still sparked the expanded trade limits. The continued concern
of lower plant production levels and surging pork cutout values helped
to spark underlying market support in all contracts Monday despite the
uncertainty of keeping pace with the growing number of market-ready
hogs. The expectation is that the inability to find homes for many of
these hogs will quickly slow farrowing levels and tighten pork supplies
significantly later in the year. Slaughter Friday is expected at 334,000
head. Saturday runs are expected at 192,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Feeder cattle placements are expected to remain reduced through the month of March. Not only is this expected to tighten longer-term supplies of fed cattle numbers through late 2020, but overall on feed numbers may show significantly lower levels in April. | 1) | Even though wholesale beef values have surged to record highs over the past couple of weeks, it is uncertain if these prices will be able to be carried through the retail system. Choice beef has rallied nearly 50% in the last two weeks. Retail prices have seen limited increases, but nothing compared to the moves higher in wholesale markets. With all states in a "state of emergency" it is still uncertain how much price adjustment there will be without sparking "anti-gouging" filings. This could significantly change the entire dynamic of the meat industry and supply chain through this pandemic. |
| 2) |
Wholesale beef values continue to
surge higher, creating a disconnect from the rest of the market. This
may put pressure on the entire complex as retail demand for beef remains
extremely strong due to limited cattle being processed due to plant
reductions.
|
2) |
Strong losses on Thursday in nearby
live cattle trade and firm pressure in deferred feeder cattle is
creating concern that additional pressure may develop at the end of the
week based on limited ability to keep cattle markets current.
|
| 3) |
Continued support in pork cutout and
cash hog values is helping to regain buyer support through the market
although continued challenges for packers to keep plant lines moving may
limit overall pork availability in the near future.
|
3) |
Wide ranging price volatility in
futures trade at the end of the week could spark additional wild up and
down price shifts over the near future. This could quickly break through
current support levels in the entire complex.
|
| 4) | Active buying support in all futures contracts Thursday is sparking renewed buyer support and quickly moving prices away from long-term lows. | 4) |
Continued reductions in pork
processing will continue to limit the availability to market hogs. At
this point, price levels are not the main concern as it is reported that
packers are not in the market even for already committed hogs due to
lower plant throughputs. This will continue to back up the production
system for weeksContinued reductions in pork processing will continue to
limit the availability to market hogs. At this point, price levels are
not the main concern as it is reported that packers are not in the
market even for already committed hogs due to lower plant throughputs.
This will continue to back up the production system for weeks.
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| #completeherdhealth |
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