The sharp triple-digit losses that developed in cattle and hog futures Tuesday is setting a bearish tone across the market as traders prepare to enter the complex midweek. This is likely to leave prices unsettled but in a mixed range.
Cattle: Steady-$2 LR Futures: Lower Live Equiv $136.67 + 0.61*
Hogs: Steady-$1 HR Futures: Mixed Lean Equiv $ 90.02 + 0.84**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Sharp losses that developed in feeder cattle trade Tuesday afternoon sparked additional spillover selling activity across the entire cattle complex. This will open the door for additional price pressure as nearby contracts have continued to break through support levels. The pressure in feeder cattle markets broke through November lows of $149.55 per cwt, sparking additional liquidation and widespread losses through most cattle contracts.
Early trade is expected to focus on short-covering and a combination of widespread liquidation with traders focusing on the potential for additional strong losses. As seen through the week, initial market support in cattle trade can quickly erode due to light trade activity and depth of buyers willing to return to the market.
Cash cattle markets posted sluggish trade activity following the market tumble with a handful of cattle traded in the South at $117 per cwt. There were a few cattle reported sold in Iowa at $123 per cwt late Tuesday. But there is not enough activity to develop a market trend.