GENERAL COMMENTS:
Early anticipation is for cash cattle to trade steady again this week. It appears that the reduced slaughter of last week, with some disruption due to ICE in Kansas packing plants and uncertainty over further disruption, may keep the packers cautious with purchases this week. The intent of duty-free imports of beef is to lower ground beef prices. However, little impact on retail ground beef prices has been realized. Market uncertainty may have more impact on beef prices, at least at the farm level. Reduced slaughter may increase boxed beef prices and keep retail prices high. Boxed beef prices were higher on Monday, with choice up $1.65 and select up $2.47.
Hog futures closed with new contract lows. This maintains the market's bearish posture, with lower lows over the past four consecutive trading days. Bottom-picking traders continue to be run over, with stops being hit, resulting in further pressure. The positive aspect of Monday's trade was that cash was higher on the National Daily Direct Afternoon Hog report, posting a gain of $0.54. Pork cutout values were also higher, up $1.06. The only category in cutouts showing a loss was bellies. With the packers aggressive with purchases and only a limited volume of hogs purchased, they should be aggressive today.
| BULL SIDE | BEAR SIDE | ||
| 1) | If cash cattle trade steady this week, live cattle futures should reduce some of the discount to cash they currently hold. | 1) | Live cattle futures have been unable to break out of their recent sideways trading pattern. Traders could liquidate recent long positions in case of further negative news. |
| 2) | Higher boxed beef prices may increase the packers' desire to purchase cattle and increase slaughter. | 2) | Feeder cattle continue to see some weakness at auctions as buyers remain less aggressive due to market uncertainty. |
| 3) | Hog futures have had four consecutive days of weakness. This may trigger short covering as traders may not want to push futures much lower. | 3) | New contract lows in hog futures on Monday do not bode well for the market. The path of least resistance is down. |
| 4) | High cash hogs on Monday with limited purchases may result in further aggressiveness today as the packers need to maintain the higher slaughter pace. | 4) | Traders continue to implement short-term trades to attempt to take a profit and have little interest in establishing long-term positions. |
No comments:
Post a Comment