General Comments:
Limited cash cattle trade developed Monday at higher money, although the trade levels are not strong enough to establish a good market trend for the week, but more activity is expected to develop in the last half of the week. The development of trade at $103 per cwt live in the South $163 to $167 dressed in the North is helping to create expectations of further firmness in cash prices. The combination of new contract highs in October live cattle futures, and firmness in boxed beef values has helped to stimulate optimism when it comes to pre-Labor Day cash sales. Feeder cattle futures posted moderate gains Tuesday, but the underlying tone of the market remains much more subdued than live cattle trade. With feeder cattle prices once again nearing resistance levels established last week, the concern that there may not be enough new market news to bring aggressive support back into the complex over the coming days and weeks. This could leave nearby feeder cattle futures hovering just near enough to recent highs, but not enough momentum to break through these price levels going into the fall months. Live cattle futures broke through short-term resistance levels Tuesday, setting the tone for further potential buyer support moving into the complex as October futures have set six-month highs, and the focus on further technical support is developing through the end of the month. The ability for beef values to continue to shift higher ahead of Labor Day is going to be closely watched and will have a significant impact on the ability for live cattle futures, as well as cash cattle markets to continue higher over the coming weeks.
Lean hog futures retracted a large portion of previous gains Tuesday as buyer support quickly ran out of gas. This expected to leave lean hog futures weak, but likely to open mixed in limited trade Wednesday morning. The inability for early week pork cutout values to follow last week's surge higher brought some reality into the market as traders continue to focus on long-term pork demand uncertainty while still trying to deal with burdensome supply of market hogs left over from spring packer shutdowns. Despite the most recent price losses, the lean hog futures still is likely to remain well above support levels as continued focus on rebuilding pork demand through the second half of the year. This will likely leave lean hog futures hovering in a range from $51 to $53 per cwt over the near future, although the previous expectations of strong technical support continuing have been curbed during early week trade. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady to 50 cents higher. Slaughter Wednesday is expected at 471,000 head. Saturday runs are expected at 225,000 head.
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Firm gains in live cattle futures broke through resistance levels, moving to $108.30, which is the highest price since February. This is expected to bring additional support Midweek.
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Feeder cattle futures trade has been unable to rekindle the aggressive gains in live cattle markets, creating resistance barriers in nearby contracts. This could limit further support during late August.
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Cash cattle trade continues to ratchet higher with higher prices in all areas although trade volume remains extremely limited.
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Questions of beef demand growth post Labor Day weekend is creating some concerns that further long-term support in futures and cash markets may be limited, especially given the underlying weakness in job markets.
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Lean hog futures continue to trade near the top end of the trading range, with renewed support expected to move back into the market following Tuesday's correction, which could rekindle commercial buyer support.
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Weekly average hog weights will be released Wednesday morning. Although weights are expected to slip week to week, significant gains from year-ago levels continue to point to aggressive pork levels available to the market.
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Continued focus on stronger pork demand through the next several weeks has helped to steadily move pork cutout values higher during early August. This could help to bring additional underlying support to nearby and deferred price levels despite the wide market swings in futures trade.
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Pork plant reductions over the last couple of weeks due to weather conditions and mechanical issues continues to limit the ability to move adequate numbers of hogs through the system. This continues to put the focus on continued readily available hogs waiting for a processing date.
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| #completeherdhealth |
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