Cattle: Steady Futures: Mixed Live Equiv: $182.94 – $0.49*
Hogs: Steady Futures: Higher Lean Equivalent: $106.88 – $1.97**
*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.
The cattle complex finally showed a positive day, but only after futures made a lower low than Wednesday. Strong weekly export selling was responsible for the higher open, but contracts then made a lower low before triggering some short coverage as traders entered the market. Weekly export sales totaled 21,500 tonnes (mt), with China being the second largest buyer. Some cash cattle were trading at weekly prices on Thursday. Southern cattle traded steady, Northern cattle traded $1.00 lower. Boxed beef was mixed with a $1.47 selection and a $0.57 selection. October feed cattle are now the contract for the front month. Futures rallied well after technical traders bought the market. Forage cattle auctions are not seeing higher prices this week as more animals are available.
Hog futures valiantly tried to maintain gains after a gap open. However, prices fell back into the close, closing the gap and recording slightly lower prices. The National Direct Afternoon Hog report showed a $4.93 cash decline with $1.97 cutouts, keeping some pressure on futures. The looming Hogs & Pigs report has traders more concerned with controlling risk than market direction. The report was neutral to market-friendly. All hogs and hogs are down 1% and only slightly below the trade estimate. Pigs kept for marketing decreased by 1% yoy and were close to last year’s level. Breeding pigs were the friendliest, down 1% from the traded estimate of 99.6%. Export sales were strong at 34,330 tons, with China being the third largest buyer. The Saturday slaughter is estimated at 130,000 head.
| bull side | BEAR SIDE | ||
| 1) |
Thursday’s gains in cattle futures may indicate a bottom may have formed in the near future. |
1) |
Cattle rallied Thursday after first making lower lows. This does not indicate a trend reversal, but perhaps just a technical recovery. |
| 2) |
Good export sales could prevent beef from recovering in the market as China remains a buyer. |
2) |
The impact of higher food prices on beef demand remains an issue as interest rates continue to rise. |
| 3) |
The Hog & Pigs report was neutral to market-friendly as all categories had actual values lower than estimates. |
3) |
Hog futures failed to hold short covering gains on Thursday despite the upcoming Hogs & Pigs report. Traders felt comfortable with their positions. |
| 4) |
Hog futures are oversold and may be shorted into the weekend. |
4) |
Continued liquidity weakness and cutbacks are an anchor in the market. |
**
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Robin Schmahl can be reached at [email protected]
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