Limit losses Monday in cattle and hog futures have opened the door for expanded trade limits in all livestock contracts. Continued concerns of coronavirus in China has caused overall meat demand growth to be questioned.
Cattle: Steady Futures: Mixed Live Equiv $142.93 -0.40*
Hogs: Steady Futures: Lower Lean Equiv $ 82.25 -0.12**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle market activity remains at a standstill early Tuesday morning, but this is not surprising given the limited early-week activity and bearish market shifts in futures trade. Asking prices and bids are undeveloped at this point, and likely may not be active until midweek or later.
It is expected that both cattle feeders and packers will desire to wait until some of the dust settles surrounding the futures trade before actively entering the market. Late-week trade is not unlikely given the overall volatility in the entire complex.
Futures trade is expected mixed, although a strong bearish tone continues to hold over the complex following limit losses in live cattle and feeder cattle trade Monday. The limit losses Monday will allow for expanded trading limits in all cattle markets, sparking increased potential for wide technical shifts through the upcoming days.
Although futures trade is posting three-month lows, the pressure in the market during 2019, still has prices far from setting long-term support levels. But the moves lower the last two weeks, have moved prices away from the top end of the trading range. This may create some significant market boundaries through the spring months, potentially locking live cattle and feeder cattle within a wide sideways trading range in the upcoming months.
Moderate short-covering attempts are likely early Tuesday morning as traders try to take advantage of limited early volume, but the underlying tone of the market is expected to remain generally weak. Tuesday slaughter runs are expected near 122,000 head.