General Comments:
Cash
cattle trade continues to slowly develop as the week continues with
sales at $158 dressed in the North while live trade is from $96 to $98
per cwt. The higher levels of live trade developed in the north.
Generally, price levels are steady to $1 per cwt higher than last week's
average and steady to firm from levels seen earlier in the week.
Additional cash trade is likely to develop over the next couple of days,
but without a major shift in futures or beef markets, it is unlikely
that prices will significantly change from current levels. Futures trade
is expected mixed. Traders seem to be comfortable with the current
market trend and price range, although any big surprises in either the
Cattle Inventory report or Cattle on Feed reports over the next couple
of days is likely to cause moderate adjustments to nearby futures trade.
The release of USDA's investigation into cattle pricing focused on
major disruptions of the production and marketing system over the last
year but was far from presenting a "smoking gun" that many had hoped to
be revealed by the investigation. This is likely to foster further
frustration through the industry over the coming days and weeks. The
monthly Cold Storage report posted firm increases in beef from both
month-ago and year-ago levels. This is expected to curb bullish market
moves as traders enter the complex Thursday morning. Thursday's
slaughter is expected at 119,000 head.
Mixed
trade is expected through the lean hog complex Thursday morning as the
recent support in nearby contracts is likely to be challenged by the
inability for pork values to maintain previous gains. There is growing
concern about the ability to keep plant production levels at current
levels, and this could further add market pressure to nearby and
deferred contract months. With average hog weights still sliding lower
week to week, the focus is less on the "current" market when it comes to
the overall size of hogs, and more on the overall number of hogs still
yet to be processed due to the backlog over the past several months. It
is likely that nearby lean hog futures will keep hovering within the $4
to $5 per cwt trading ranges seen over the last month since there is
little indication there is enough fundamental or technical support to
break out of this pattern. Cash hog prices are expected $1 lower to $1
higher with most bids expected steady to 50 cents higher. Slaughter
Thursday is expected at 475,000 head. Saturday runs are expected at
226,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Cash
cattle prices continue to slowly inch higher. Cash values are $1 per
cwt higher in most areas, helping to build on the limited but growing
support in cash markets the past couple of weeks.
| 1) |
Total
beef supplies in freezers increased from May and year-ago levels at the
end of June. This continued build in beef supplies brings focus to the
lack of demand both from seasonal pressure and economic pressure over
the last few months.
|
| 2) |
Market
stability is starting in boxed beef values. This could signal that the
summer lows may be near, if not already hit. Firming beef values over
the next month is based on demand support expected through the end of
the year, which could spark renewed interest in futures trade.
| 2) |
Lack
of direction following USDA's investigation in cattle pricing is likely
to add additional frustration and concern about the wild market shifts
seen over the last year in cattle pricing and beef values.
|
| 3) |
Average
hog weights continue to slip lower with the weekly average weight
sliding 0.8 pounds per head to $282.3. Hog weights have fallen more than
15 pounds per head since April, surrounded by plant production delays.
This continues to help keep markets current despite the abundant number
of hogs still in the system.
| 3) |
Pork
cutout values tumbled lower once again Wednesday, adding to the roller
coaster-like adjustments as markets find little stability on a daily or
weekly basis. The inability to consistently push pork prices higher will
impede long-term support.
|
| 4) |
Pork
in freezers fell 25% from year-ago levels during the month of June.
This is a significant shift lower and continues to put emphasis on the
limited packer movement seen during the COVID-19 crisis.
| 4) |
Pork
supplies fell only 1% during the month of June from May levels. Given
the traditionally strong seasonal demand seen during the month of June,
this is expected to be a bearish factor and could continue to indicate
further summer demand weakness, as well as put pressure on lean hog
futures trade.
|
 |
| #completeherdhealth |
No comments:
Post a Comment