General Comments:
Cash cattle interest remains sluggish Tuesday and active trade will not likely until the second half of the week. With the November cattle on feed report released Friday afternoon, there is a potential that at least a portion of trade will be delayed until after the 2 p.m. report release. Asking prices and bids have yet to be actively reported for the week, although feeders will continue to focus on the recent surge higher in boxed beef values with higher asking prices in order to take advantage of the cash market gains the last couple of weeks. The biggest question will be how the futures price tumble last Friday will impact packers' interest in the market, this is not expected to be fully known until later in the week until both sides enter the market. Showlists for the week appear to be generally lower, which is not surprising given packers likely to reduce the number of cattle needed due to holiday schedules next week. Futures trade is likely to remain mixed in a narrow-to-moderate range as traders continue to wander in the wide but consistent sideways pattern over the last few weeks. Even though traders have backed away from recent resistance levels, live cattle and feeder cattle futures remain well above October lows, which could allow for further price swings without creating significant technical shifts in the complex. The renewed support in boxed beef values Monday is helping to stimulate the expectation that market fundamentals may continue to improve over the near future as traders look beyond the short term, well into 2021.
Lean hog futures continue to remain unstable as limited market volume developed Monday, adding to the concerns last week about testing intermediate support levels. Front-month December contracts were able to etch out a narrow-to-moderate gain Monday, but February futures continued to lead the market lower, setting two-month lows. As prices were unable to hold support levels near $65 per cwt. February futures closed at $63.77 per cwt, sparking renewed concerns of further market weakness as traders struggle with the fact that uncertain pork demand growth is coming at a time when hog numbers continue to remain burdensome. The recent market pressure is not expected to reach lows set during the summer months, but the inability to sustain nearby support at a time when surrounding commodity and financial markets are surging higher is creating concerns about renewed buyer interest. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady 50 cents lower. Slaughter Tuesday is expected at 490,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | Boxed beef prices continue to advance higher despite the pullback in futures trade last week. This is expected to continue to add resolve to feedlot managers throughout the country looking for higher cash cattle trade at the end of the week. |
1) | Early pre-report estimates point to increased cattle on feed numbers, sparking concerns that the beef industry will continue to deal with large supply levels well into 2021. |
| 2) | The Dow Jones Index is trading at an all-time high, with the potential to move above 30,000 for the first time in history. The underlying support in economic markets will remain bullish to meat markets long term, despite the current demand and production concerns. |
2) | Elevated feed prices remain a major concern through the entire feeder cattle and fed cattle market with strong global demand for corn and soybeans creating the expectation of higher costs to continue well into next year. |
| 3) | Given increased COVID-19 cases throughout the country, pork packers continue to remain focused on maintaining current processing schedules. At this point, there has been limited delays to plant production, allowing for plants to keep up with the larger number of market-ready hogs. | 3) | February lean hog futures quickly and aggressively broke through initial resistance levels near $65 per cwt Monday. This created additional downside market potential in the coming days as traders look for any sign of market stability heading into the holiday season. |
| 4) | Pork cutout values bounced higher Monday. The renewed support in pork prices is expected to help stimulate additional underlying support in nearby and deferred lean hog futures as the week continues. | 4) | Cash hog values have continued to steadily erode, creating further concerns that additional pressure may develop in the complex through the end of November. |
 |
| #completecalfcare |
No comments:
Post a Comment