Cattle: Steady Futures: Higher Live Equiv: $211.30 +$0.97*
Hogs: Higher Futures: Lower Lean Equiv: $91.11 -$2.66**
*Based on formula estimating live cattle equivalent of gross packer revenue. (The Live Cattle Equiv. Index has been updated to depict recent changes in live cattle weights and grading percentages.)
** based on formula estimating lean hog equivalent of gross packer revenue.
GENERAL COMMENTS:There is rising optimism that cash will trade steady or higher this week. Part of this is due to no cash trade taking place yet this week. The past few weeks, cash began trading early with lower prices. The fact that no bids or offers have been posted may push business to the end of the week, resulting in packers having to bid up to purchase cattle. The strength of futures may give feedlots confidence to hold out. Boxed beef still does not provide solid support in the market as prices were mixed Tuesday. Choice was up $2.25 with select down $0.88.
Hogs continue to struggle, not only in futures contracts but in cash and cutouts as well. Futures were mixed Tuesday with some rolling of December contracts to February and April. December goes off the board Thursday and is holding very close to the index. Rather than posting the usual gain on Tuesday, cash showed a decline of $0.89 on the National Direct Afternoon Hog report with the weighted average falling to $48.77. Cutouts also took a hit with values down $2.66. Packers may be more aggressive Wednesday as they will try to purchase a good number of hogs at midweek rather than wait until the end of the week.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cattle futures have been up three consecutive days on rising cash optimism. Further strength is possible as traders buy the strength. |
1) | Cattle futures have risen for three consecutive days. Many times, that is the duration of short-covering, which could result in mixed or lower trade today. |
| 2) | Cash business being delayed until midweek or later increases the potential for higher cash as it seems feedlots will hold out for nothing less than steady cash. |
2) | Boxed beef prices are not able to find consistent solid support. The overall trend of boxed beef remains lower. |
| 3) | Hog futures are holding above the lows, which could increase technical buying interest. |
3) | Cash hogs continue to decline, which will leave limited upside potential for futures. |
| 4) | Lower pork prices should stimulate both domestic and international demand. |
4) | Hog futures may revisit contract lows before traders will step in to purchase more aggressively in anticipation of a bounce such at the pattern last time. |
**
For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CST. Also, stay tuned to our Quick Takes throughout the day for periodic updates on the futures markets.
Robin Schmahl can be reached at rschmahl@agdairy.com
(c) Copyright 2023 DTN, LLC. All rights reserved.
