With cash cattle trade remaining light the last two weeks, limited overall direction is expected on the development of cash movement early in the week. Both sides are expected to remain generally quiet early in the week despite the overall lack of active trade at the end of last week. It will be interesting to see just how many cattle are reported sold when the morning report is released. The pullback in plant speeds over the last week will likely continue to limit aggressive buying of packers, but all packers should be starting to become short-bought going into the last two weeks of April. This may add increased focus for earlier week trade, but there is uncertainty over packers being able to keep plants running due to virus outbreaks, which significantly limits potential cash market activity. Showlists are expected to remain higher given that overall cash trade and packer movement has been limited through most of April. Until packers get back to a more normal schedule, it is likely that cash market trade will remain limited. Futures trade is expected mixed Monday morning. The ability to hold late week gains in most live cattle and feeder cattle contracts last week, especially deferred contracts, as well as firming beef values may spark early follow-through buyer support. But outside market pressure developing during overnight trade is likely to curb the optimism in livestock trade, as these outside influencers may have a more significant impact in morning trade. Monday slaughter is expected at 93,000 head.
Additional sharp gains in pork cutout values continues to point to the disconnect in the hog and pork markets based on the lack of processing ability of plants due to COVID-19 outbreaks in the plants. Although each affected plant and meatpacking company is doing its best to get back to speed as soon as possible, the uncertainty of when plants will be able to ramp up to a more normal production capacity still limits market support. With pork production well above demand the last few months, running out of pork in the near future is not the main concern. Keeping market flow moving as aggressive market-ready hog numbers continue around the country is the concern. With an industry that typically processes just shy of half a million head a day, any backlog in production would have significant ripple effects through the entire industry. Futures are expected mixed as traders balance further potential gains in meat values, while cash prices are likely to remain under pressure due to the limited packer needs. Cash hog values are expected steady to $2 per cwt lower with most bids expected $1 per cwt lower. Slaughter Monday is expected at 461,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Active gains in wholesale beef values through the end of last week is pointing to the tightness in meat supplies due to recent changes in processing levels. This will continue to be the focus across the industry in the coming days. | 1) | Lack of active cash cattle trade last week puts more focus on backing up the supply chain. This will leave even more market-ready cattle in feedyards, which will need to eventually be processed as the entire industry tries to play catch up over the upcoming weeks. |
| 2) |
Cautious optimism that national daily COVID-19 cases have peaked during early April is helping to put more focus on potential market support and the hope that a recovery plan will develop in the near future.
| 2) |
The inability for packers to run, or run at full capacity continues to be the weak link. Until COVID-19 cased are reduced within employee populations, the inability to keep active schedules may remain limited.
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| 3) |
Pork cutout values have surged higher with the focus on lighter packer schedules creating some concern that pork supplies will tighten in the near future.
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Further weakness in cash hog values have developed through the last week as packers limit buying needs due to plant closures. This will likely further pressure cash hog values during the next couple of days.
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| 4) | Late week, support in lean hog futures helped to push prices off long-term lows. This could help to create some renewed buyer support during early-week trade in nearby and deferred lean hog trade. | 4) |
Limited hog packer schedules have continued to be the main focus through the hog market over the last week. The uncertainty is whether packers should start production at idled plants, and if they do, at what speed of production levels will keep the market under pressure in the near future.
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