Cattle: Steady Futures: Mixed to Firm Live Equiv: $137.42 +0.36*
Hogs: $1 Higher Futures: Mixed Lean Equiv: $ 72.80 -0.71**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Early-week movement in cash cattle activity remains at a standstill, with overall showlists mixed to generally smaller for the week. This could keep active market movement from developing until late in the week once again as traders look for additional support from both outside markets as well as the development of cattle futures movement. Futures trade is expected to start out in a mixed but tightly grouped trading range with limited volume moving into the complex early Tuesday. This may spark some additional activity as the session continues as traders' assess the ability to build on the market stability over the last couple of days. The narrow trading ranges on Monday seem to be helping to give traders limited confidence to become more active as the month of September continues, but with cattle markets well entrenched in the sideways trading range, it may become extremely difficult to move markets significantly in either direction.
Given the strong $6 per cwt rally in the last two weeks in nearby lean hog futures, traders continue to focus on longer-term market support, but the potential for a moderate-to-strong market correction continues to develop across the complex. This may add some additional weakness to the complex with traders looking for additional market support as cash hog prices continue to adjust higher. Early cash trade is expected to be steady to $3 per cwt higher, with most bids expected to be $1 to $1.50 per cwt higher. The potential to move additional market ready hogs through the system will continue to keep processing speeds active with a total of 469,000 head expected Tuesday.
|BULL SIDE||BEAR SIDE|
The narrow market gains seen in live cattle futures have still been enough to set September highs, allowing traders to focus on potential follow-through buyer support through the next couple of weeks.
Despite the firm moves in futures trade, there is still limited underlying support to help to push cash markets significantly higher through the early fall months. This could contain cash markets in a moderate range similar to the range that has held in live cattle futures.
Demand for beef products is expected to firm through the upcoming months as generally supportive outside market conditions are expected to help stimulate general buying activity due to current economic factors. This could help to maintain longer-term demand support that may spark additional interest in all trade.
Beef values have a hard time showing market firmness with mixed-to-moderately lower cutout values developing following the Labor Day holiday. The focus on overall market stability is limiting active buyer support in beef cutouts.
Cash market activity continues to firm with additional buyer support moving into the complex during early September. This is expected to keep bids firming through the rest of the week, and potentially through the rest of September.
Lack of market support seen in deferred lean hog futures through the last couple of weeks is creating additional longer-term concerns when it comes to sustaining the support in front-month futures. This could limit additional trade volume from entering the complex through the month of September.
Aggressive plant schedules continue to keep processors focusing on the potential to move additional pork through the end of the year. This is helping to maintain increased overall support across the complex.
Front-month lean hog futures continue to hold an aggressive discount to deferred markets with October futures trading $25 per cwt lower than summer contracts. The focus on current supplies is likely to keep most traders unwilling to aggressively move into the complex.
Rick Kment can be reached at firstname.lastname@example.org
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