Cattle: Steady to $1 Higher Futures: Higher Live Equiv: Unavailable*
Hogs: Mixed Futures: Mixed Lean Equiv: Unavailable**
* 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 in the South remains at a standstill going into the Friday session with at least light trade expected before the end of the week. Limited trade in the North was all over the place and inconsistent with prices at $180 to $185 dressed basis. This ranged from steady to $5 per cwt higher. There was not enough active trade in these areas to determine a more accurate market trend, which is likely to spark some additional interest Friday. Packer activity is likely to improve in both areas through the morning with traders looking for additional market firmness through the cash complex. Feeders continue to hold onto firm asking prices, with the possibility of late afternoon trade in several areas Friday. Futures trade is expected firm Friday following moderate underlying support developing in live cattle and feeder cattle Thursday. Trade volume is likely to slow through the end of the week, although the underlying firm market tone is expected to be carried into the weekend. The ability to hold prices at current trading ranges through the end of the week in both live cattle and feeder cattle trade is likely to spark underlying commercial buying early next week.
Sharp pressure in August futures Thursday created additional underlying softness through the complex, eroding a strong portion of previous week gains. This continues to add volatility to the market as traders once again are reminded that hog markets are not "out of the woods yet" when it comes to changing the long-term direction of the market. Fundamental pressure remains with strong domestic pork production facing uncertain export demand as trade tensions with China continue, along with the tariff threats to other countries that could weaken trade over the next several months. Cash trade is called steady to $1 lower Thursday morning with most bids steady. Expected slaughter Thursday is at 477,000 head. Saturday runs are expected at 38,000 head.
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Strong underlying support is rebuilding in cattle futures with firm buyer support redeveloping across the complex. This is bringing some short-term stability near summer highs.
Wholesale beef values have been unable to show significant support through the week, which may limit fundamental support through the rest of July.
Limited cash cattle trade on Thursday showed increased optimism of additional price support. Cash prices were steady to $5 per cwt higher, creating expectations of additional firmness by the end of the week.
Light-to-moderate pressure in deferred feeder cattle trade Thursday is causing some concern that the optimism during the week may be cooling quickly. This could limit market support over the near future.
Light-to-moderate cash hog trade is developing as packers have increased bids through the end of the week. The strong underlying support in futures trade early in the week is sparking renewed underlying cash market trade.
Sharp losses in August lean hog trade quickly brought the hog complex back to reality and focused on the challenges in changing the market trend given the lack of demand support in hog trade.
Despite the Thursday market pullback in hog trade, August futures still remains well above short-term lows, allowing traders to focus on rebuilding market support even if volatile market swings develop.
Continued wide swings in traditional summer pork products such as ribs and bellies (bacon) has created lack of consistency and long-term support through the entire complex.
Rick Kment can be reached email@example.com
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