The dominant April live cattle futures contract closed down 2.95, just a nickel off limit down. The market really took Friday's Cattle on Feed report to heart. It was interesting to see that cattle broke to near limit down while hogs did just fine today. We just added a few extra cattle into the summer timeframe to compete directly against pork.
We are not suggesting the market has fully ignored Friday's bearish Hogs and Pigs report. It is likely more that with holiday trade this week we saw those new bears from the couple of weeks take a little quick profit.
Monday's higher finish in wholesale pork makes it three days in a row of gains. We have not had a three day gain since Aug. 11 to 13. New highs for the uptrend in futures were reached again Monday. Cattle futures broke down and filled that gap left from Friday's trade.
On Friday, we had a good initial rally to new highs for this uptrend that failed to hold by the close. Today, the market broke hard initially and it rebounded by the close. As with the cattle comments, there is a lot of speculation in this market about any potential pick up in consumer demand next year. Along with some changing perceptions on general demand next year we can also discuss the short term issues at the end user level.
It is now National pork month. This month of pork features at the retail counter was started to help each the strain from the heavy supply portion of the year. The effect on this year's pork pricing won't be easy to calculate. We are coming into a very well supplied meat environment.
Fundamentally, as I spoke to some cattle clients over the past few days with the heat dome or the "death dome" approaching much of the Midwest this week, just keeping weights the same will be a victory.
Last week we noted our original $78 per pound expiration target for summer futures would need to be raised up to $80. It was still a bearish price forecast compared with prices at the time was simply was not as bearish as it could be.