Follow-through weakness is expected in the livestock complex early Wednesday morning as concerns continue about cattle supplies and pork demand surrounding the trade war with China.
Cattle: Steady Futures: Lower Live Equiv: $143.37 -0.70*
Hogs: Steady Futures: Mixed Lean Equiv: $ 92.08 +0.54**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Increased cash market interest is expected Wednesday morning with limited initial packer bids developing, while asking prices are expected to become more evident as the day develops. Given the overall tone of the cattle complex and wholesale beef values, it is likely that steady money at the end of the week would be considered a bullish move.
Bids are expected to develop near $115 live and $185 dressed, but both sides will be closely focusing on the direction of futures trade during the morning. Limited volume is expected in live cattle and feeder cattle futures trade with the focus split between follow-through selling pressure and short-covering.
Some additional adjustments are expected the next couple of days as traders try to prepare for Friday’s Cattle on Feed report, expecting bearish market shifts developing due to increased supply levels in April. This may continue to add moderate-to-strong weakness through all cattle trade with feeder cattle markets potentially giving back the moderate gains from last week, testing short-term lows once again.