Cattle: Steady Futures: Higher Live Equiv: $149.50 +0.47*
Hogs: Steady to 50 cents LR Futures: Mixed Lean Equiv: $ 68.66 +1.19**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle activity took place Thursday, but activity was light at $128 in the South, steady with last week. Northern activity was light also with steady prices reported. The rebound of futures did not have any impact on cash buyers as most bids remained $128 or lower in the South and $205 in the North. There should be a flurry of cash activity Friday as it is near the end of the week, and buyers need to purchase to fill slaughter needs. January beef supply in cold storage was510.1 million pounds, up 8.4 million pounds from January 2018 and up 14.5 million pounds from December 2018. This may keep a lid on price potential. However, the Cattle on Feed report to be released Friday afternoon may keep trading activity in check.
Lean hog futures activity could show a rebound as the January Cold Storage report showed a decrease of inventory from the previous year. Frozen pork in storage on Jan. 31 totaled 562.7 million pounds, down 18.0 million pounds from a year ago. However, stocks increased 57.4 million pounds from December, but a large increase in January is not uncommon. Overnight bearish news from China could impact the desire for traders to step into this market more aggressively due to China's trade data missing expectations. China's February exports fell 20% versus the 4.8% decline expected. Thursday's estimated hog slaughter was 475,000 head. Cash hogs are expected steady to lower, which could keep trading mixed. Spillover buying from the cattle market did not develop.
|BULL SIDE||BEAR SIDE|
Sharp gains in the cattle complex moved live cattle back near contract highs in June and August. Follow-though strength may continue.
There is always uncertainty surrounding a report. Higher placement or more cattle on feed could eliminate market gains.
The Cattle on Feed report could show placements as much as 8% lower than a year ago.
|2)||Cash cattle trade at generally steady prices with last week does not suggest higher futures prices are warranted.|
|3)||A slightly friendly January Cold Storage report could keep the market from retesting the lows, keeping the market sideways to higher.||3)||Hog futures continue to struggle to break out of price. Technically, the market is in neutral with traders seeing no buy or sell signals.|
Continued reports of African swine fever being found in more places might mean increased demand for pork in the near future if tariffs are lifted.
|4)||The on again off again settlement of the trade war with China is old news with traders wanting to see confirmation of a resumption of export business. Until then, trade may be lethargic.|
Robin Schmahl can be reached at firstname.lastname@example.org
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