There was some limited cash activity in the
North Thursday, unfortunately trading was $3 to $5 lower than last week.
The holiday weekend has some influence on the aggressiveness of packers
as the need to purchase may not be as urgent as usual. Packer bids are
holding at $105 with asking prices at $107 to $108 in the South with
bids and $170 to $172 and asking prices at $178 to $180 in the North.
Lower cash trade is making it difficult for futures to break out of the
range of the past three weeks. Huge chart gaps loom above the market
that likely will be filled at some point, but underlying cash needs to
provide solid support. Friday is the last trading day for the August
contract with the October taking over as the front month next week.
Lean hog futures have so far put in an
impressive week with a $5.60 per cwt rise from the close last Friday.
Some technical indicators suggest further upside should unfold. However,
the quick rise this week may lend itself to some profit-taking before
the extended weekend. Futures still need to break above the overall
downtrend before traders become more comfortable with gains. Pressure
may stem from the possibility of lower cash trading due to weakness of
cutouts.
| BULL SIDE | BEAR SIDE | ||
| 1) |
The October contract taking over as
front-month next week carrying a substantial discount to cash may result
in strong buying interest.
|
1) |
Cash cattle trading $5.00 lower does not lend itself to the market, finding solid support in the near-term.
|
| 2) |
Packers limited interest in
procuring cattle this week may result in more aggressive buying interest
next week as plants need to maintain processing capacity and fill
demand.
|
2) |
Labor Day signals the end of summer
as schools are back in session and the grilling season slows somewhat.
This may have an impact on cutout values in the near-term.
|
| 3) |
Lean hog futures should see some
follow-through buying Friday as traders may continue to short-cover into
the extended weekend. The impressive rise in prices and bullish
technical indicators should provide support.
|
3) |
Although lead hog futures have
increased significantly this week, the October contract is still in an
overall downtrend. Lower cash may keep upside potential limited.
|
| 4) |
Trading may be somewhat lighter
Friday as it is an extended holiday weekend. This could allow futures to
move higher with lighter seller resistance.
|
4) |
Pork values have been struggling and have yet to generate solid support. Cash is expected to trade steady to lower in response.
|
 |
| #completeherdhealth |
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