Cattle: Steady Futures: Mixed Live Equiv: $214.39 + $0.57*
Hogs: Lower Futures: Higher Lean Equivalent: $92.97 + $0.19**
*Based on a formula estimating the equivalent of live cattle to packer gross proceeds. (The Live Cattle Equiv. Index has been updated to reflect recent changes in live cattle weights and grading percentages.)
** Based on a formula estimating Lean Hog Equivalent of Gross Packer Sales.
Cash cattle were expected to trade earlier this week on lighter business last week, tighter inventories and stronger packaged beef. However, Packers haven’t blinked so far this week. Expectation is pinned for higher cash but traders might have some doubts as April and June livestock futures have not traded higher since the Cattle on Feed report. Weekly export sales were dismal at just 8,100 tonnes (mt), down 48% from the previous week. Boxed beef showed strength with a $0.67 pick and a $1.15 pick. Forage cattle paused Thursday after a choppy Wednesday. Feeder prices at auctions have been mixed, making one wonder if the prices are just getting too high.
Hog futures opened higher and traded higher for a while, but came under pressure throughout the day. Weekly export sales were good at 31,000 tonnes but down 40% from the previous week. China was not listed as one of the top buyers. Cutouts gained $0.19, but that didn’t provide enough support for the traders. The National Direct Afternoon Hog report showed a cash loss of $0.80. Cash expected lower on Friday with cutouts key to market strength. The fact that it’s the end of the week may result in some underfunding, but that may not be a driving force. Pig weights were down 0.3 pounds this week, averaging 285.7 pounds.
| bull side | BEAR SIDE | ||
| 1) |
Cash is expected to trade higher this week as packers need to buy cattle to keep slaughtering and meeting demand. |
1) |
Live cattle futures nearby have failed to make new highs since the Cattle on Feed report. The market may be running out of buyers. |
| 2) |
Cattle are not more common and feedlots are not overcrowded with cattle. Higher cash resources are needed to bring cattle to market. |
2) |
Live cattle in April could switch to a cash discount in anticipation of cash price weakness over the next month or so. |
| 3) |
Hog futures were knocked down this week which could result in short covering into the weekend. |
3) |
Hog futures failed to find strength despite cutouts being higher for the past two days. |
| 4) |
Pork clippings have closed higher for the past two days with Friday likely to show further gain as demand could improve. |
4) |
Packers’ margins are below a year ago and the three-year average, making packers less willing to pay more for hogs if they can avoid it. |
**
For our next Livestock update, please visit our noon Livestock Comments between 11:00am and 12:00pm CST. Also, follow our Quick Takes throughout the day for regular futures market updates.
Robin Schmahl can be reached at [email protected]
(c) Copyright 2023 DTN, LLC. All rights reserved.
Comments are closed.