Cattle: Steady Futures: Higher Live Equiv: $144.49 -0.41*
Hogs: Steady Futures: Mixed Lean Equiv: $ 73.28 -0.93**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cattle futures are expected to remain higher during early trade following strong midweek gains. The ability to push prices higher in feeder cattle Wednesday is expected to create a combination of follow-through buyer support, mixed with morning position-taking as traders still remain uncertain about strong additional gains moving into feeder cattle trade especially at the end of the month. Live cattle futures are expected to continue to quickly follow the direction of feeder cattle markets through the day Thursday, but will also focus on outside market direction shifts through the session. Cash cattle markets are likely to spark additional market interest, although bids through most of the morning are expected to redevelop near $122 live and $196 dressed. Asking prices remain well above current bids at $126 and higher live and $200 dressed. Active trade is probably going to be pushed off until sometime Friday.
Cash hog bids are expected to erode early Thursday morning with bids expected steady to $1 per cwt lower. Some additional market pressure is likely to develop through the end of the week due to lower packer processing schedules impacted by the weather. Most bids are expected to be steady to 50 cents per cwt lower through the morning. Futures are expected to draw additional market improvement as traders are attempting to build on the midweek market rally. This may spark some additional underlying activity in nearby contracts as traders try to bounce off of short-term lows over the next week.
|BULL SIDE||BEAR SIDE|
|1) Sharp triple-digit gains, which flooded the market Wednesday, are likely to create additional follow-through support through all cattle trade. This may bring additional stability to the weak feeder cattle complex.||1) The latest round of winter storms that have moved through the Midwest and well into the Northeast, which has continued to reduce feed intake, and reduced if not eliminated, weight conversions. This is likely to delay market-ready cattle in many areas.|
|2)Beef values have gained momentum midweek with firm gains developing in choice and select cuts. This may add even more underlying support through the cattle complex through the end of the week.|| |
2) Despite the strong midweek rally, feeder cattle futures continue to trade at the lowest level since May 2018 on the continuous month chart. The inability to hold December gains continues to add bearishness to the complex.
|3)Packer interest remains extremely strong with an estimated 477,000 head sought once again Thursday with estimated Saturday runs expected to near 215,000 head.||3) Additional pressure keeps being added to pork cutout values as all primal cuts eroded Wednesday. The lack of follow-through support during the first half of the week may continue to erode overall buyer support in futures and cash markets.|
|4) April contracts continue to hold a strong $4 per cwt premium to spot-month February futures, helping to support cash market moves as cash market activity starts to move to the April contract month in the next couple of weeks.||4)Reduced packer activity due to the latest rounds of winter weather is expected to add even more weakness to the entire complex. This will back up market-ready hogs available to packers, likely reducing cash bids through the end of the week.|
Rick Kment can be reached at email@example.com
© Copyright 2019 DTN/The Progressive Farmer. All rights reserved.