Cash cattle activity through the rest of the
week will become a larger focus of the market as packer bids have been
generally quiet through the first half of the week. A few cattle were
sold in the South at $105 to $107 and $172 to $175 in the North
Wednesday afternoon, but this is not enough movement to establish any
sense of market trend at this point. Packer interest is expected to
improve through the day, although active trade may be delayed until
sometime Friday, and potentially after the Cattle on Feed report Friday
afternoon. Asking prices remain at $108 in the South and $178 in the
North. Futures trade is expected to open steady to higher with limited
but supportive follow-through buying moving into the complex. The
ability to add consistent but firm support to the weak market complex
continues to add uncertainty to the entire complex as traders focus on
trying to rebuild following last week's losses and establishing
fundamental and technical support through the end of the week.
Active pressure developed Wednesday afternoon in
lean hog futures, sparking additional uncertainty in the complex. This
may add even more weakness as traders look for short-term support.
Continued pressure in pork values, and the inability for cash hog values
to stabilize through the early half of the week has quickly created
moderate futures pressure. October futures led the complex lower, moving
to $63.30 per cwt. Although prices still remain well above long-term
support levels set last week, the inability to string together
consistent gains in nearby futures and break away from the weaker trend
is still concerning and could add to another test of market lows in the
near future. Cash bids are expected steady to $1 lower with most bids
steady to weak. Expected slaughter Thursday is at 483,000 head. Saturday
runs are expected at 128,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Wholesale beef values continue to
march higher with increased buyer support helping to solidify the higher
price levels. This is helping to create limited but firm support in
live cattle futures during the week.
|
1) |
Cash cattle trade still remains
under pressure following last week's market weakness and general
pressure in futures trade. This could limit packer interest through the
end of the month, keeping cash markets subdued.
|
| 2) |
Active support continues to develop
in feeder cattle trade as traders focus on rebuilding market confidence
through the complex. Triple-digit gains has helped to spark increased
underlying buying interest in nearby and deferred futures the last
couple of trading sessions.
|
2) |
The recent surge in wholesale beef
values has the potential to bring sticker shock to retail prices heading
into the Labor Day weekend. The aggressive moves higher at the beef
counter could quickly limit short-term beef demand.
|
| 3) |
Active packer interest through the
week has continued to accelerate slaughter numbers. This is creating the
need to uncover additional market-ready hogs in order to fulfill these
aggressive plant runs. This needed buying should limit downside
movements in cash trade.
|
3) |
Sharp triple-digit losses flooded
nearby contracts as traders quickly liquidated positions late in the
session. The inability to spark additional buyer support may
significantly limit the upside market potential.
|
| 4) |
The real threat of African swine
fever in China and other areas of Asia cannot be forgotten. This has and
will continue to limit world supply of pork and create a long-term need
for pork, despite ongoing trade issues with China.
|
4) |
Aggressive losses in pork cutouts
and cash hog values midweek has continued to put a limit on market
support. Given the large numbers of hogs in the system and uncertainty
concerning the desire to buy U.S. pork to meet global demand due to
trade issues, additional price pressure may continue over the near
future.
|
 |
| #completeherdhealth |
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