Mixed trade midweek through livestock markets seemed to create a sense of relief, although the underlying tone of the market remains weak. Traders are still cautious given the lack of support in outside markets as the week continues.
Cattle: Steady Futures: Mixed Live Equiv $136.95 -0.78*
Hogs: Steady Futures: Mixed Lean Equiv $ 69.44 -1.48**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash business may be done for the week following light-to-moderate trade that developed Tuesday and Wednesday. Most of the trade on Wednesday was seen as clean-up activity with prices steady with earlier trade this week. But these prices are $3 to $5 per cwt below last week’s trade levels.
Live Southern trade is at $115 per cwt for the week, while dressed trade in the North posted a wider range from $184 to $187 per cwt, but both sides are willing to move into the first week of March as they try to reestablish market stability in an unstable market.
Futures trade is expected mixed in limited early trade. This continues to focus on the potential that buyers are willing to step back into the complex following the aggressive sharp losses early in the week. The continued weakness in outside markets and inability for stock markets to hold early gains is keeping additional focus on recent market weakness.
Triple-digit gains in nearby feeder cattle trade through the session Wednesday was a good sign, but the inability to sustain early gains in live cattle trade continues to add uncertainty in the complex.
With April and June live cattle futures currently hovering above long-term support set last August and September, the question of whether these support levels will hold is becoming a significant reality. If April futures do break below $110.17 per cwt, the potential that additional widespread commercial liquidation may quickly move into the complex increases significantly.
Even though most of the focus remains on global instances of coronavirus, the underlying concern remains how the market will be able to hold if increased outbreaks are seen in the U.S. Wednesday slaughter is expected near 121,000 head.