General Comments:
Although
cash cattle trade remains light to moderate, the higher prices are a
relief and point to increased optimism as more cattle are likely to be
sold at the higher levels before the end of the week. Southern sales at
$100 to $101 developed Thursday. This is generally $1 per cwt higher
than the previous day, and now has increased prices $3 to $4 per cwt
from last week's levels. Dressed trade in the north was posted in a wide
range from $163 to $168 per cwt with most trade at $163 per cwt, moving
prices generally $3 per cwt higher late last week's Nebraska average.
Although it is too early to determine the weekly average prices at this
point, these price gains may be enough to move the average above $100
per cwt and create some additional market support through the rest of
August. Thursday's slaughter is expected at 118,000 head. Futures trade
are mixed following a moderate-to-firm pullback in live cattle and
feeder cattle trade Thursday. The optimism in live cattle trade early in
the week is fading slightly, although most of the gains are being held
intact as traders are keeping markets within the top end of the recent
trading range. The focus at the end of the week will be the direction
and sustaining previous gains in feeder cattle trade. With corn prices
expected to stabilize Friday, the underlying buyer support based on
lower feed costs and falling production costs seem to be quickly backing
away from the market. But traders remain focused on the potential to
establish firming price support in live cattle trade near the $107 per
cwt levels in actively traded October contracts, looking for limited but
supporting market moves as the month of August continues.
Limited
changes have developed in lean hog futures trade as most trade interest
has focused on the cattle complex, which has shown more active price
direction and interest during early August. Mixed prices are expected to
once again develop across most of the lean hog contracts with nearby
futures still hovering just below the $50 per cwt trading level. With
prices in this level, markets remain above support levels, but have been
unable to spark any sense of market support or excitement to break away
from the bottom end of the trading range. The inability of August and
October futures to move above $50 per cwt in the near future will
continue to erode market optimism as traders focus on the uncertainty of
pork demand growth through the near future while hog and pork supplies
remain elevated. Cash hog prices are expected $1 lower to $1 higher with
most bids expected steady to 50 cents lower. Slaughter Friday is
expected at 472,000 head. Saturday runs are expected at 225,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Cash
cattle prices continue to shift higher on a daily basis through the
week with Southern live trade moving as high as $101 per cwt heading
into Friday morning. This should push price levels $3 to $4 per cwt
higher than last week, narrowing the discount to futures trade and
pointing to renewed optimism through the fall months.
| 1) |
Feeder
cattle futures backed away from recent gains through the end of the
week, allowing for additional market pressure to potentially develop. A
break away from early week gains could spark follow-through position
taking, limiting overall market optimism in all cattle trade.
|
| 2) |
Live
cattle futures continue to trade near five-month highs with October
futures prices holding near $107 per cwt. The ability to maintain price
levels within this trading range is expected to spark follow-through
commercial buying over the coming days.
| 2) |
Beef
demand concerns continue to remain strong as the unknown status of
school systems returning in the coming weeks, and questions if these
plans to return to the classroom will be sustained if COVID case numbers
continue to rise. This will impact beef demand from a school lunch
perspective, potentially creating additional volatility in the market.
|
| 3) | Strong gains in pork cutout values once again developed Thursday. This is pointing to the ability to actively and aggressively move pork supplies despite the lower lean hog values during August. | 3) |
Continued
pressure in nearby lean hog futures is putting more focus on resistance
levels at or near $50 per cwt. This continues to add underlying
weakness to the entire hog complex, which may continue through the month
of August.
|
| 4) |
Lean
hog futures remain oversold as nearby contracts inch closer to
long-term lows once again. Consistent support in cash hog values and
pork cutout prices could quickly bring active buyers back into the
market with nearby contracts able to move significantly higher before
experiencing significant resistance levels.
| 4) |
Further
pressure in cash hog values has quickly limited market optimism
following last week's shift higher. This is moving the national average
price well below $40 per cwt once again, causing concerns that further
pressure may develop in the coming days.
|
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| #completeherdhealth |
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