Cash cattle trade started to develop Thursday
afternoon with light trade reported as prices in the South appear to be
settling around $99 per cwt. This is $1 per cwt lower from last week,
while Northern dressed trade is $159 to $160 per cwt, a $6 to $7 per cwt
drop from week-ago levels. Although many of the Nebraska sales were
sold for delayed delivery in late September, the weaker tone of the
market remains the focus despite strong recent upward movement in
futures trade at the end of the week. Some trade is expected Friday, but
at this point, it is uncertain if price levels will be able to deviate
from earlier levels. Futures trade is expected to be sluggish early
Friday with most attention still focused on lean hog trade. The general
weakness in cash cattle futures combined with potential softness in beef
cutout values may add even more uncertainty to nearby live cattle
trade. October futures remain well under $100 per cwt and without a
significant shift in fundamental market direction, may remain in this
range through most of September. Traders continue to focus on the
readily available cattle in the system through September and most of
October, which is likely to add increased short-term pressure. Cattle
slaughter for Friday is expected at 116,000 head.
Another round of strong price moves are expected
in lean hog trade following limit gains Thursday of $3 per cwt. Markets
opened limit higher in most nearby contracts Thursday morning, not only
pushing prices higher, but limiting the amount of trade taking place
due to traders being unable to trade at these levels in an open market.
An announcement early Friday morning that China will exempt pork product
from tariff increases is creating renewed hope that additional progress
may quickly develop in the October trade talks. This could open the
door for active selling to China in the next few weeks. The challenge
with markets unable to trade Thursday is that there is no way to
determine the amount of buy orders that remain unfilled, or where the
current market will land when markets are not locked in limit shifts.
Lean hog limits will move to $4.50 per cwt, with the latest news and
late-week market optimism creating the potential to open locked in limit
gains once again. Cash bids are expected steady to $2 lower with most
bids steady to weak. Expected slaughter Friday is at 476,000 head.
Saturday runs are expected at 192,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Limited support developed in boxed
beef markets Thursday, creating some end of the week stability. This is
likely to help renew end-of-week futures support if traders focus on the
potential for beef values to establish a stable short-term range.
|
1) |
Weaker cash cattle trade may cause
live cattle futures to pull back from recent gains. The lack of cash
market support could soften the market.
|
| 2) |
Gains in lean hog trade is allowing
for spillover support through the entire cattle complex. This may help
to drive additional buyer support back into nearby live cattle trade
Friday morning.
|
2) |
Activity in live cattle and feeder
cattle trade is expected to be limited due to the renewed focus on hog
futures. This could lead to moderate-to-firm end-of-the-week pressure
based on traders transitioning back into lean hog complex.
|
| 3) |
Announcements by China that pork
will be exempt to tariff increases is expected to bring a flood of
buying back into the hog complex.
|
3) |
A strong disconnect is starting to
develop between futures and cash markets. The availability of ample
market-ready hogs for packers needs is allowing for continued cash
market pressure.
|
| 4) |
Momentum is building in lean hog
futures trade based on recent China news and hopes that this will lead
to positive trade talks and a potential trade deal sooner than later.
This has sparked additional commercial and noncommercial buying to flood
back into the lean hog complex.
|
4) |
Pork values have continued to erode
due to limited support. The growing pork stocks in the last several
months is adding to the uncertainty that any China news will quickly
reduce these supplies.
|
 |
| #completeherdhealth |
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