Continued widespread market concerns are seen early Tuesday following limit losses in cattle futures Monday. The underlying fear of widespread coronavirus impacting the overall global and domestic economies as more cases are seen outside of China could limit short-term buyer support.
Cattle: Steady Futures: Lower Live Equiv $138.20 +0.92*
Hogs: Steady Futures: Lower Lean Equiv $ 71.27 +1.32**
* 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 activity took a back seat Monday to the aggressive liquidation in futures trade and widespread commodity and financial losses early in the week. Bids and asking prices are undeveloped and likely to remain so until there is some sense of stability in the futures trade.
Showlists were mixed early in the week, which continues to show limited availability of market-ready cattle through the end of the month even after light-to-moderate trade developed last week. It is likely that cash market trade will be pushed to the last half of the week, and despite attempts to hold prices steady to higher by feedlot managers, the bearish tone of futures trade is going to make this a difficult task.
Futures trade is expected to remain lower early Tuesday, although the complex still remains oversold and currently driven by fear that the global economic wheels may be falling off due to the spread of coronavirus. As always, fear is a very poor measuring tool, as many times the overall movements driven by the fear are not rational, especially when it comes to the market.
Because of the price point, the beef market is the most vulnerable to an economic downturn than any of the other meat markets, creating the extreme reaction seen early in the week.
With April live cattle futures and most feeder cattle futures closing limit lower Monday, expanded trade limits are available, creating the opportunity for markets to swing $4.50 per cwt in live cattle contracts and $6.75 per cwt in feeder cattle before trade is halted.
Given the still bearish tone in outside markets, the potential for additional widespread liquidation remains strong despite any fundamental support developing in meat values and domestic demand support likely to build over the upcoming weeks. Tuesday slaughter is expected near 121,000 head.