Cattle: Higher Futures: Mixed Live Equiv: $188.58 – $2.40*
Hogs: Lower Futures: Mixed Lean Equivalent: $114.65 + $2.11**
*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.
Traders waited for Cash Cattle to move and were disappointed, causing the market to falter. Nebraska saw some Dressed sells at $1.00 higher but volume was very light and didn’t lend itself to solid price direction. Cattle are traded on Thursday but there is no way of predicting who will give way. Feedlots seem to remain unyielding, possibly forcing the packers hand. The concern is that boxed beef took a hit on Wednesday, with pick down $3.19 and pick down $3.47. However, the pace of battle remains strong. The Biden administration says a tentative deal has been reached with the railroad to avoid a strike on Friday. This can alleviate some of the uncertainty in the market.
Pigs nearby lost some of the gains from Tuesday’s strong rally. Cash faltered as the National Direct Afternoon Hog report fell $1.15. Packers could purchase a full set of pigs needed to keep up the pace of slaughter. The packers may not be quite as aggressive again on Thursday, which could make traders uncertain of further gains. Cutouts gained $2.11 while bellies posted a strong gain of $6.02. The weekly export sales will be released on Thursday morning. This report will contain four weeks of export sales data and will offer a lot for the market to decipher. This could determine the price direction. The Saturday slaughter of pigs is estimated at 72,000 head.
| bull side | BEAR SIDE | ||
| 1) |
Feedlots have been stubborn with their offers, which could force packers to pay up. |
1) |
Cattle futures already include a small cash gain. This can make futures uneasy. |
| 2) |
The rail strike appears to have been averted, resulting in less disruption to the economy than feared. This can prevent food prices from rising further. |
2) |
Boxed beef’s weakness was not positive for the market, suggesting that demand may be slowing. |
| 3) |
Pork cutouts were up Wednesday, which is good news for Packers as they look to improve margins. |
3) |
Hog futures’ inability to follow through Wednesday leaves the market vulnerable to further technical selling. |
| 4) |
If export sales have been good over the past four weeks, the market could hold recent gains and move higher. |
4) |
Less than desirable export sales over the past four weeks could keep lean hog futures under pressure. |
**
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Robin Schmahl can be reached at [email protected]
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