The focus on feedlot managers pushing for higher
cash cattle prices following futures market support and a break higher
in prices last week is evident with increased asking prices. But as of
yet, bids have yet to be developed, which may limit optimism through the
midweek session. A few token bids may be seen Wednesday, although at
this point, it is unlikely that active cash market movement will develop
until later in the week given the sideways moves expected in futures
trade and limited support in beef values. Futures trade is likely to be
mixed with limited direction developing. The inability to sustain early
week support could lead to a moderate price shift lower through the end
of the week as traders adjust to the current trading range with limited
additional market news or direction expected through the week.
Underlying support is starting to become more
evident in lean hog trade through the week with firm gains developing
over the last two trading sessions as prices move to $62 per cwt in
October futures while December futures have advanced above $69 per cwt.
The potential that China will purchase pork is helping to motivate
additional buyer interest, which had previously remained out of the
market over the recent weeks. Confirmation of active sales to China will
not only help to spark increased short-term buying, but will also
create additional expectations that a trade deal may be developing and
push prices higher in deferred contracts also. Cash hog values are
expected to be steady to $1 per cwt higher, with most bids expected
steady to firm. Expected slaughter Wednesday is at 484,000 head.
Saturday runs are expected near 254,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Cattle feeders appear to be
expecting additional cash market support through the week as elevated
asking prices are showing up. Asking prices of $104 to $105 live in the
South and $170 dressed in the North create a target for higher weekly
cash price levels.
|
1) |
Wholesale beef values have continued
to erode, limiting underlying support despite recent cash and futures
market support. The inability to hold beef values stable may limit the
potential for renewed buyer support in nearby futures trade during early
October.
|
| 2) |
Feeder cattle futures have been able
to hold onto early week gains. This focus is helping to solidify
additional buyer support through the entire feeder cattle complex, with
potential commercial support moving into the complex over the near
future.
|
2) |
Despite long-term beef cattle
tightness expected through the end of the year and early 2020, the focus
on ample market-ready cattle available at packer disposal may still
limit short-term support through the complex.
|
| 3) |
Active negotiated cash hog trade
developed Tuesday with over 22,000 head sold as prices moved higher.
This is over double the typical daily negotiated trade totals and
evidence that packers are gaining increased market access at higher
prices.
|
3) |
Despite the recent optimism
surrounding China, the road to a trade deal could still be long and
winding, given both sides have fundamental differences that neither side
appears willing to give in on.
|
| 4) |
The potential that pork trades to
China are developing, or in the works, is sparking underlying buyer
support in most lean hog trade. This could stimulate gains if sales are
confirmed the next few days.
|
4) | Active plant speeds have helped to keep the hog market current, but the concern of increasing overall pork demand in order to clear product from freezers continues to be the main focus through the end of the year. This may limit long-term price support if active long-term China sales do not develop over the coming weeks and months. |
 |
| #completeherdhealth |
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