Cash cattle activity is expected to remain
sluggish Monday with limited direction following the underlying pressure
that has developed the last couple of weeks. Showlists and inventory
taking are likely to be the extent of any market interest through the
day Monday, but the recent trend toward midweek sales activity is likely
to spark increased interest earlier in the week. The recent rally in
cattle futures should help to add some stability to the cash complex,
but traders still remain uncertain given the impact on the trade war
with China on the overall economy. Futures are expected to continue
higher following the late-week rally. The announcement last week that
Japan had dropped age restrictions on beef exports is expected to help
support overall beef exports to Japan. Continued expectations of further
domestic demand support and firm trader interest returning to the live
cattle complex may help to shift prices off of recent lows.
Mixed trade is expected to continue to develop
through lean hog trade with traders still focusing on China and the
uncertainty that surrounds the entire complex. With African swine fever
continuing to be a major issue, impacting overall pork production
through most of Asia, the overall need to supply pork will continue to
keep markets supported. But the trade war with China will create
additional questions about how much pork will move from the U.S. into
China and if both sides will use pork as a bargaining chip in order to
move trade talks to the next level. There continues to be underlying
fundamental support in nearby trade following firmness late last week,
but increased volatility is likely the next few days. Cash trade is
called $1 lower to $1 higher Monday morning with most bids steady.
Expected slaughter Monday is at 464,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) | The announcement late last week that Japan has waived age restrictions on U.S. beef is expected to spark additional interest in live cattle futures due to expected export gains. | 1) |
Overall economic uncertainty
surrounding the continued trade war with China is expected to bring
additional volatility to all markets, including the beef complex.
|
| 2) | Active buyer interest in feeder cattle trade Friday sparked sharp triple-digit gains in most contracts. The focus on traders moving back into the oversold complex based on demand growth is likely to attract additional interest through the coming weeks. | 2) |
Cool wet weather in much of the Corn
Belt will continue to limit planting progress, sparking increased price
gains in most grain trade. This directly impacts beef production costs
and will curb feeder cattle support.
|
| 3) |
Active futures interest has helped
to solidify additional buyer activity in lean hog trade, moving nearby
futures $6 per cwt higher the last week.
|
3) |
Softness late last week in deferred
lean hog trade is likely to create some concern surrounding the ability
to spark additional upward movement through the entire pork complex.
|
| 4) |
Stability in cash hog prices has
continued to support additional trade activity, with packers consistent
in throttling back production levels in order to regain margins, tighter
supplies should develop over the near future.
|
4) | Pork cutout values eroded late last week, not only further reducing packer margins, but creating concerns that the recent support in futures and cash prices may be unable to hold if consistent demand support slips. |
 |
| #completeherdhealth |
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