Cold weather seen as bullish for cattle market, analyst says Wintry weather, China concerns support new highs in the hog market. By Terry Roggensack 2/3/2021 The cattle market continues to see a strong demand tone, with beef prices pushing to their highest level since early December. Talk of better export demand, the surge higher in pork prices, and the impact of restaurants reopening are all seen as supportive forces. With the heavy cattle weights, short-term supplies seem ample, but the continued advance in beef prices is a bullish force. Total slaughter for last week reached 653,000 head, up 2.4% from last year, while beef production was up 4.6% from last year. Technically, the market still looks vulnerable to at least a short-term correction. With bitter cold in the forecast into the weekend and some areas with big snow amounts, some traders see the weather as a bullish force. On the other hand, traders may question the short-term consumer demand for beef with so much snow on the East Coast. The USDA boxed beef cutout was up 45¢ at midsession yesterday and closed $1.08 higher at $236.76. This was up from $229.06 the previous week and was the highest the cutout had been since December 3. No cash cattle trade has been reported, so far this week. Prices jumped roughly $3 last week. The USDA estimated cattle slaughter came in at 118,000 head yesterday. This brings the total for the week so far to 235,000 head, up from 232,000 last week but down from 241,000 a year ago. Market Ideas The market still looks vulnerable to at least a short-term technical correction with resistance for April Live Cattle at $122.97 and support at $120.70 and $119.75. June Live Cattle resistance is at $118.95, with support at $116.77 and $115.85. Hogs Wintry U.S. weather and concerns about production issues in China support new highs. More talk of very strong demand for pork has helped support a resumption of the uptrend and new contract highs in lean hogs. There has been some concern for increased hog disease in China, which could slow their expansion phase and cause imports of pork to remain strong over the near term. African swine fever and PED outbreaks have been reported, and there is talk that hog prices in northeastern China pushed higher in December. China’s pig herd increased 31% in 2020 according to official data, as the rebuilding process continued. The pig price rally in December may have been evidence of a resurgence in pig disease cases. However, prices have pushed lower this year. China’s national average spot pig price today was down 1.1% from the previous session. Prices are down 3.6% for the week, 9.7% year to date, and 15% from a year ago. April hogs traded in choppy and two-sided action early yesterday, but the market surged later in the day to new contract highs. Talk of weather issues may have helped support new buying. The USDA pork cutout, released after the close yesterday, came in at $79.96, down $1.34 from Monday but up from $79.31 the previous week. The CME Lean Hog Index as of January 29 was $68.27, up from $67.40 the previous session and up from $65.88 the previous week. The USDA estimated hog slaughter came in at 495,000 head yesterday. This brings the total for the week so far to 978,000 head, up from 935,000 last week but down from 984,000 a year ago. Market Ideas Price support for the April Lean Hogs futures contract comes in at $76.75, with $78.42 as next upside target after yesterday’s new contract highs. There is also a technical swing target at $78.87. June Lean Hog futures support is at $87.77, with $89.02 as the next upside target. For daily updates on cattle, hogs, corn, wheat, and the soy complex, visit hightowerreport.com. Read more about Crop Markets More Crop Markets Ag markets close higher Wednesday Article Cold weather seen as bullish for cattle market, analyst says Article What? China buys 230 million bushels of U.S. corn in four days Article Is the U.S. set to run out of soybean inventory, analyst asks Article
