By the end of the day, there is expected to be a signed phase-one trade agreement with China. Although there still remains a lot of questions to still be answered, at times it appeared this day may never come to pass.
Cattle: Steady Futures: Mixed Live Equiv $142.60 +1.36*
Hogs: Steady Futures: Higher Lean Equiv $ 79.24 +0.05**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle trade is expected to remain generally quiet through the day with limited bids likely before the last half of the week. Although asking prices have become more available with cattle priced at $126 to $127 per cwt live basis in the North and South, and $205 and higher dressed in the North, the overall lack of early week interest from packers at this point will likely delay trade until Thursday or Friday, most likely Friday.
Feedlot managers continue to focus on steady to higher money in order to continue the firming market trend through early 2020. Given the fact that ready cattle supplies are tightening over the next couple of months and packers still need to aggressively source cattle in order to maintain the strong underlying demand developing through the winter and spring months, packers are expected to remain aggressive despite eroding margins.
Futures trade is expected mixed, but could show some underlying stability and excitement as more focus is put on the signing of the phase-one trade deal with China.
Even though there is still a long ways to go in order to make either side happy, and the overall impact on beef exports will be much smaller than other commodity markets, any step forward is a positive move. Even with the back and forth trade over the last couple of weeks, live cattle futures still remain “in the hunt” of contract highs, with April futures holding within a 50-cent range of December highs.
The ability to break through this resistance level in the coming days is expected to spark underlying noncommercial buyer support during the last half of January. Wednesday slaughter runs are expected near 121,000 head.