Live and feeder futures should open at least moderately lower, checked by residual selling and technical bearishness. Similarly, lean hog contracts seem set to continue on the defensive, pressured by both plentiful market hog numbers and struggling pork demand.
Cattle: Steady Futures: 50-100 LR Live Equiv $149.83 -0.16*
Hogs: Steady-$1 LR Futures: 50-100 LR Lean Equiv $ 77.05 -0.59**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
If the cattle basis was considerably weaker (i.e., closer to the historical average), we’d say that the development of trade volume as early as Tuesday would be quite remote. However, we’ve seen a good deal of Tuesday action this week exactly because of strong basis realities and it could happen again.
Indeed, the board may have to stage some kind of recovery Tuesday in order to strengthen the selling hands of feedlot managers. Accordingly, both sides will be closely monitoring futures. Live and feeder futures seem staged to open moderately lower, pressured by residual selling and technical concerns.