General Comments:
Firmer cash cattle trade seen during the week was unable to bring renewed buyer support to futures trade Thursday. This is expected to leave uncertainty developing most of Friday as traders anticipate the cattle on feed report. Cash cattle trade has trickled into the market all week with the latest moves Thursday focused on business in the North. The pullback in futures trade and lack of follow-through support seen in the South created slight disappointment with dressed prices ranging from $167 to $174 per cwt. Most trade was seen at $169 per cwt. This is still $1 per cwt higher than last week's average, but shy of the $2 to $3 per cwt gains seen earlier in the week in other regions. The focus on expected higher cattle placements in July in the upcoming report and concern that recent highs in nearby live cattle and feeder cattle contracts may establish strong resistance levels over the upcoming weeks is quickly reducing the general optimism in cash and futures trade. The move below $110 per cwt in October futures continues to be a strong blow to the live cattle complex through the end of the week, with traders closely monitoring Friday activity. A weekly close below this level could indicate a short-term market high may have been set as traders start to focus on potential overall beef demand following the Labor Day holiday. The upcoming cattle on feed report will be closely watched, with moderate placement increases expected, while overall cattle on feed levels are expected to be little changed as pre-report estimates seem to be consistently calling for a fractional gain from year-ago levels.
Sharp losses Thursday in lean hog futures sparked renewed optimism across the entire lean hog futures complex. Even though cash and pork cutout values bounced higher through the last half of the week, strong technically driven buyer support is seen through the complex. This helped to push October and December lean hog futures above the $55 per cwt threshold, easily breaking through previous resistance levels and opening the door for further potential support at the end of the week. The ability to attract and retain noncommercial buyer support based on expected short and long term demand growth will be essential in maintaining recent price moves through the end of the month. Pork values continue to shift higher, although moderate but steady gains seem to be the approach most buyers are looking for in hog market fundamentals. It is still too early to tell if the strong triple-digit rally in nearby lean hogs will be enough to break away from steady but measured gains in cash hog trade and pork cutout values. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady to 50 cents higher. Slaughter Friday is expected at 482,000 head. Saturday runs are expected at 238,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Boxed beef values continue to march higher, putting more focus on potential short- and long-term growth in beef demand.
| 1) |
Strong losses at the end of the week in nearby live cattle trade has not only broken the recent bullish momentum, but a move below $110 per cwt in October futures is raising additional concerns if a short-term market high has already been set.
|
| 2) |
Cash cattle continue to show moderate price gains during the week. Higher prices this week would be the seventh-straight week of higher cash cattle price levels, helping to build even more confidence that further gains may develop during late August and early September.
| 2) |
Traders will closely be watching the afternoon release of the cattle on feed report. Cattle placements seem to be the most uncertain of all the categories Friday with analysts showing little consensus on just how big of increase of cattle moving to feedlots should be expected. Marketing also is a major focus, with concerns that current packer paces may limit the clearance of additional cattle through the fall months.
|
| 3) |
Aggressive commercial and noncommercial buying flooded nearby lean hog contracts Thursday. This quickly burst through strong resistance levels, moving prices to two-month highs.
| 3) |
Strong supply levels of hogs are expected to keep the market under pressure through most of the fall and winter. Despite the recent gains, aggressive further price moves in nearby contracts may be hard to maintain in the near future.
|
| 4) |
Firm fundamental support is developing in the hog complex with firm gains steadily seen in cash hog and pork cutout values. The focus on strong holiday demand is likely to keep buyers active through the end of the month.
| 4) |
Even though nearby lean hog futures have moved above $55 per cwt, the inability to spark active and sustained support in cash hog markets is concerning. Cash lean hog values are still well below $40 per cwt, leaving a wide gap between futures values and actual cash markets.
|
 |
| #completeherdhealth |
No comments:
Post a Comment