Following strong price support through the last half of the week in all areas of cattle country, the focus Monday morning is expected to move to showlist distribution and inventory taking. Trade developed in the North at $170 per cwt Friday, a $5 per cwt rally from the previous week. Additional trade cash activity set at $107 per cwt live basis in the South is $3 to $4 per cwt above last week's price levels and elevated from early week trade of $105 per cwt in the area. Futures are expected mixed in light-to-moderate trade Monday morning. The light price pullback seen on Friday is causing some additional uncertainty as traders remain cautious given the fact that December contracts have rallied $11.60 per cwt over the September low without a sizable market correction. This in itself could leave the live cattle futures complex vulnerable early in the week for a light-to-moderate shift lower. The strong upward move in cash cattle trade over the last couple of weeks is helping to rebuild fundamental support through the entire complex, but traders are going to need to see reduced market-ready cattle on showlist over the next couple of weeks in order to sustain the expectation and current optimism that overall supplies are starting to tighten. Monday slaughter runs are expected at 116,000 head.
Mixed trade activity is expected early Monday morning. The continued market shift lower Friday is causing additional underlying softness through the entire complex as traders focus on the potential for increased market weakness. The lack of renewed talk concerning trade talk issues and overall lack of aggressive pork buying from China over the last couple of weeks has quickly cooled the market, and created growing uncertainty going into the planned upcoming trade talks with China. There is likely to be additional chatter through the next few days concerning overall export trade issues that could impact the overall direction of market activity in the lean hog futures. With last week's growing concern surrounding trade issues and tariff's being placed on the European Union, the lean hog complex will continue to be sensitive to these market moves. Although the European Union is not near the top of the list of U.S. pork exports, the fact that China has been importing the lion's share of needed pork from Europe, had created hope that these in this region would be a source of secondary export trade in order to replace product sold to China. Cash hog values are expected steady to 50 cents per cwt lower, with most bids steady. Expected slaughter Monday is at 483,000 head.
| BULL SIDE | BEAR SIDE | ||
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Strong end-of-the-week cash cattle support continues to spark increased overall interest through all markets during early October. This momentum is expected to elevate asking prices the next couple of days.
| 1) |
Firm price pressure late last week in feeder cattle trade continues to focus on the expectation that additional feeder cattle supplies are likely over the next month as additional calves hit the sales rings. This could limit upside market direction over the near future.
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Despite October contracts remain lightly traded, the move above pre-fire price levels late last week has created additional momentum through the entire complex.
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Boxed beef values continue to struggle to maintain the recent momentum in cash and futures trade. The inability to stabilize wholesale beef values could quickly end the recent gains in cash cattle trade.
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Firm cash hog market activity is expected to create additional stability through the entire complex with traders focusing on continued need to feed the aggressive appetite by pork processors.
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Firm futures market pressure in lean hog trade has added increased uncertainty to the entire complex. December futures have fallen over $5 per cwt from recent highs as traders have become less optimistic about short-term trade results.
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| 4) |
Additional African swine fever outbreaks announced in South Korea continues to focus on the need to supply global supplies to a supply- starved region of the world. This is expected to help build long-term exports to South Korea.
| 4) | Pork values continue to slide lower through the end of last week. This is creating additional concerns that continued strong supplies of market-ready hogs is overwhelming late-year demand for pork. |
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| #completeherdhealth |
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