Strong end-of-the-day gains in most livestock trade Monday combined with active outside market support gives hope that a market bottom may have been set. Lower new COVID-19 cases and deaths after a potential peak on Saturday is creating optimism that better times are ahead.
Cattle: Steady Futures: Mixed Live Equiv $149.23 -0.20*
Hogs: Lower Futures: Higher Lean Equiv $ 62.61 +0.32**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle interest remains quiet early Tuesday morning following limited activity on either side Monday. It is likely that most cash market movement will be delayed until midweek or later, but the focus on reduced processing speeds is likely to create more limited access to the market by many feeders over the near future.
The underlying support in cattle futures prices, especially gains in deferred contracts trade early in the week, is likely to limit downward pressure this week. The more immediate concern for the entire beef industry and market is the reported cases of COVID-19 at different plants.
This has led to suspended production at two plants to date, although additional production losses are expected as plants focus on intense cleaning and moving up planned cleaning closures for the near future. Increased absenteeism at many of these plants is also limiting overall capacity at plants that have remained open and willing to try to keep production lines stable.
Futures prices are expected mixed early Tuesday morning. On Monday, April futures posted expanded limit losses, while all other contracts except for June futures posted moderate-to-strong gains, creating a divide between immediate price levels and a potential market recovery for the rest of the summer.
With limited hope in new COVID-19 cases, which are below Saturday’s high levels, is creating optimism. The Dow Jones closing over 1,600 points higher Monday with another strong rally during overnight trade is sparking potential optimism through the beef complex. Tuesday slaughter is expected at 118,000 head.