The livestock markets have spent most of the year in virtual trading ranges of various degrees depending on the commodity. All have experienced a major drop at the beginning of the year and spent the last few months attempting to recovery to the levels at the beginning of the year. The question now is, where do we go from here? With adequate numbers of all livestock, it would appear that the demand for product will be the determining factor in the weeks and months ahead.
As for the cattle market, it would appear to be the most sluggish of the group as it has only recovered about two thirds of the loss since the first of the year. One problem has been the slow movement in the export arena which has only just begun to pick up.
Domestic demand has been fairly constant, but the absence of a brisk export demand seems to be the problem. Another problem has been the total production of beef due to heavier cattle.
The latest U.S. Department of Agriculture Cattle on Feed report was seen as negative because of the greater number on feed as well as higher placements than expected. The market did open lower the following trading day as anticipated; but quickly found buying in the futures and closed most contracts higher on the day.
The feeder cattle market has been the more exciting of the cattle complex as prices have been rising since the sell-off bottomed in early April. The outlook from this point may be a bit guarded because of the supply of cattle. If domestic or foreign demand increases, this could support prices into the end of the year. The next few weeks could set the tone for which direction the cattle prices take into the end of the year.
September has been a very good month for the hog market as prices moved over the $70 level for the first time since January.
Good demand for pork both domestic and export have been the main catalyst for this current rally. From a seasonal point of view, the hog market usually finds a top and moves lower into the end of the year. At this juncture, the futures market for hogs is in an overbought condition. This would suggest that market is susceptible to some possible corrective action in the days ahead. It may be short-term, or there would be a possibility that it could turn into a longer term downtrend. This would suggest that producers should carefully consider some type of protective or defensive strategy looking forward into the fall months ahead.