Lean hog contracts should open moderately higher thanks to follow-through buying and stronger fundamentals. Look for the cattle complex to begin with mixed price action linked to a combination of residual selling and short-covering.
Cattle: Steady-$2 HR Futures: Mixed Live Equiv $133.43 + .34*
Hogs: Steady-$1 HR Futures: 50-100 HR Lean Equiv $ 80.37 + .81**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
The cash cattle market should be a typical yawner for a Tuesday with bids and asking prices poorly defined. We expect cattle to eventually be priced higher given recent momentum. Yet little may be said by either side until Thursday or Friday.
CME officials reported Monday afternoon that 34 loads were retendered against spot October live cattle (16 for $1; 18 for $2), all at West Point. The 18 loads discounted for $2 were all reclaimed. Live and feeder futures are expected to open on a mixed basis thanks to spillover selling and short-covering.