Lean hog contracts should open moderately higher, supported by follow-through buying and firming carcass value. The cattle complex seems likely to begin with modest strength thanks in part to short-covering and the premium status of recent feedlot sales.
Cattle: Steady Futures: 25-50 HR Live Equiv $140.11 – .92*
Hogs: Steady-$1 HR Futures: 25-50 HR Lean Equiv $ 85.00 + .77**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
We assume that the cash cattle market will remain in slow gear Tuesday but are still puzzled a bit by last week’s early jump start. Yet it seems like a safe bet that feedlot managers will at least pause a day or so to see if the board can stabilize, perhaps expanding the bounce seen late last week.
Furthermore, such evidence will no doubt play a big role in how new showlists will be priced. Live and feeder futures seem likely to open some higher thanks to follow-through buying, short-covering and cash premiums.