Cattle: Higher Futures: Mixed Live Equiv: $214.65 + $0.26*
Hogs: Higher Futures: Mixed Lean Equivalent: $92.80 – $0.17**
*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.
After holding out through Friday afternoon, live cattle in the South were trading $1.00 to $2.00 higher in cash, while northern dressed cattle were trading an average of $4.00 higher. Higher cash is a weekly event and this may be the norm for a while. With reduced numbers of cattle and good demand, it will take more money to pull cattle forward. Feedlots clearly have the leverage and can sell cattle at will and not have to deal with a backlog. Packaged beef was mixed Friday, with selection up $0.82 and selection down $0.72. This is not expected to have any impact on today’s trading. However, traders are expected to follow a similar pattern to the past few weeks with mixed activity when assessing weekend demand.
It was good to see Friday’s hog futures close higher across the board, but gains were limited. It appeared to be the result of a brief weekend cover rather than a fundamental change. The National Direct afternoon report showed a cash loss of $0.66. Clipouts showed a slight loss of $0.16. For the past several weeks, higher cash action has evolved on Monday and this pattern could continue today as it seems the packers are getting a bit more aggressive early in the week rather than waiting until mid-week.
| bull side | BEAR SIDE | ||
| 1) |
Increasing cash weekly has become the norm. It is expected higher again this week. |
1) |
Higher cash cattle failed to propel futures to new highs. Traders could remain cautious ahead of cash trading again this week. |
| 2) |
Forage cattle have closed new contract highs, both live and forage cattle futures are poised to make new highs and continue the uptrend. |
2) |
Poor weekly export sales may indicate beef prices are too high for international buyers. Domestic demand can also be affected. |
| 3) |
Hog futures closed higher despite lower cash and clippings. Traders may not want to push the market down too much. |
3) |
The higher close for hogs was not supported by the underlying fundamentals. This may limit upside potential. |
| 4) |
Hog futures are somewhat oversold which could limit further liquidation and generate further short coverage. |
4) |
Packers continue to have access to hogs without having to be aggressive with cash. |
**
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Robin Schmahl can be reached at [email protected]
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