General Comments:
Cash cattle trade appears to be well on its way for the week. Trade over the last two days has developed at $195 to $97 per cwt live basis in the South and $152 to $160 dressed. Most trade is at $95 live and $157 to $160 dressed. This would represent steady to $3 per cwt higher for the week, and consistent with early-week trade. The surge in futures prices and stability in boxed beef values will help to stimulate additional momentum in asking prices, although the overall trade may continue to trickle into the market through the next few days. The early-week market trade may have already set the tone of the market moves. Strong gains on Tuesday in nearby live cattle futures sparked underlying buyer support. This moved spot month August futures to $101.30 per cwt with a gain of $2.50 per cwt. The move broke through short-term resistance levels and moved to the highest price since early May. The ability to hold a two-month high through the month of July is expected to spark additional underlying technical support despite the concern that beef demand may remain sluggish over the coming weeks. Even though moderate pressure could redevelop early Thursday morning as traders take the opportunity to square positions at the higher price levels, the ability to hold front-month August futures above $100 per cwt will be huge in bringing additional buyer support back to the complex over the next week. Thursday's slaughter is expected at 120,000 head.
With all the activity confined to the cattle complex, lean hog trade appears to be hovering in a narrowly traded pattern as limited volume and market direction may develop through the end of the week. Traders are looking for additional direction in export sales, with China the main focus in the weekly sales and deliveries. Continued uncertainty and tensions with China puts doubt on strong export movements and further sales, but the fact that pork remains cheap and China's need for pork continues to grow could bring about additional moves despite overall disagreements between the two countries. Narrow trading ranges are likely most of the morning Thursday with the potential of underlying firmness in pork cutout values potentially indicating that a market low has been set. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady to 50 cents higher. Slaughter Thursday is expected at 473,000 head. Saturday runs are expected near 197,000 head.
| BULL SIDE | BEAR SIDE | ||
| 1) |
Sharp gains in nearby live cattle futures have broken out of the sideways market trend, sparking the potential for increased buyer support through late July.
| 1) |
The sharp gains in live cattle and feeder cattle futures come with little fundamental or technical market shifts. Some price volatility is expected through the end of the week as traders try to determine just how strong recent buyer interest remains.
|
| 2) |
Cash cattle trade is steady to $3 per cwt higher with expected firmness continuing as the week develops due to higher futures trade and stability in beef values.
| 2) |
Cash cattle trade continue to trade at a significant discount to futures trade. The negative basis levels continue to grow with the focus on readily available market-ready cattle in all areas of the country.
|
| 3) |
Triple-digit gains developed Wednesday in pork cutout values. Despite the current backlog of market-ready hogs still available, the expectation that pork values have tested seasonal lows is bringing about increased buyer support.
| 3) |
Limited buyer support midweek in lean hog futures continues to put the focus on market apathy. Nearby contracts continue to hover near the $50 per cwt trading range, with little indication of significant moves in either direction.
|
| 4) |
Strong export sales to China in Thursday's report would likely spark underlying firmness in the complex and confirm the recent support in pork values.
| 4) |
Continued tensions with China will put even more focus on export sales and deliveries to the country in Thursday's export sales report. Limited sales, or large cancellations would likely spark active pressure in nearby lean hog trade, focusing on the inability to move pork out of the system through early July.
|
 |
| #completecalfcare |
No comments:
Post a Comment