Cash cattle activity is expected to remain quiet
Friday following the bulk of trade developing midweek. Even though
there may be some clean-up trade trickling into the market through the
end of the day, a major buying move back into the market is unlikely.
The limited light trade that was seen Thursday was even lower than
midweek levels. It is hard to pinpoint a market direction until more
total numbers of cattle sold is seen, and what prices are negotiated.
Cash prices through the week seem to range anywhere between $105 and
$110 live and $170 to $175 dressed. These would be anywhere from $3 to
$11 per cwt lower than last week's prices. Firm gains developing Friday
morning in Dow Jones futures and moderate buying in most overnight
commodity trade points to the expectation that traders feel the current
plummet in the market may be adequate for now, but there still remains
more uncertainty looming over all markets. At this time, cattle futures
and all livestock markets are riding the "market bus" lower with as
financial markets continue to be in charge of the steering wheel. Limit
losses are seen in all feeder cattle trade and all nearby live cattle
futures, which will enact expanded trading limits. The continued move
pushing June through October futures below $100 per cwt indicates that
severity of the recent market pressure due to aggressive widespread
liquidation in the complex. Friday slaughter is expected near 118,000
head.
Lean hog futures quickly joined the cattle
complex with limit losses Thursday after being able to brave the
liquidation storm much better than other markets in the previous week.
Not only did sharp losses in outside markets create widespread
liquidation, but the aggressive reduction of export sales to China in
Thursday's report sparked bearish market movement through the entire
complex. The potential to bring limited-to-moderate buying back into
outside markets should help to support lean hog trade at the end of the
week. This will create market uncertainty as traders focus on domestic
and export demand moving forward. Cash hog prices are called $1 lower to
$1 higher with most bids expected steady to 50 cents higher. Slaughter
Friday is expected at 488,000 head. Saturday runs are expected at
154,000 head.
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| #completeherdhealth |
| BULL SIDE | BEAR SIDE | |||||
| 1) |
Consumer beef demand still remains
good, although much of the recent support is driven by panic buying,
which is leaving meat cases bare. This continues to push additional
product through the retail supply chain.
|
1) | Expanded trading limits are available in all livestock trade. This would allow live cattle and lean hog futures to move $4.50 per cwt in either direction and feeder cattle futures to shift $6.75 per cwt before markets are stopped. | |||
| 2) | Select wholesale beef prices posted firm gains Thursday. The underlying support in boxed beef values still is not showing significant weakness that would be expected given the tumble in futures and cash market prices due to overall demand still hanging in there. | 2) | The list of canceled activities and events continues to mount, and extends well into late spring and early summer. This is expected to quickly limit retail demand and food service locations based on reduced travel, which will have a longer-term impact on meat demand. | |||
| 3) |
Pork cutout values continue to shift
higher with moderate gains trickling into the market through the week.
This continues to focus on long-term market direction and expectations
that domestic and global spending on meat products will not
significantly change.
|
3) | The surprise export sales reduction by China in this week's export sales report is creating concerns that pork exports to China moving forward may continue to be weakened. | |||
| 4) | The potential for firm market buying moving back into lean hog trade is developing as traders appear to be searching for a market bottom. This could lead to active market gains given the liquidated positions over the last several weeks. | 4) | April lean hog futures broke through long-term support set at the end of January due to limit losses Thursday. This officially broke the hog complex out of the sideways market trend and could allow for additional technical pressure through the next couple weeks. |
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