The cattle complex should open on a mixed basis as traders position ahead of cash news and the June 1 Cattle on Feed report. Lean hog issues are also expected to begin with uneven price action thanks to a cautious combination of residual selling and short-covering.
Cattle: Steady-$2 LR Futures: Mixed Live Equiv: $142.88 – .76
Hogs: Steady-$1 LR Futures: Mixed Lean Equiv: $ 90.15 + .17**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cattle buyers should quickly restate the bids posted Wednesday (i.e., $108 live in the South, and $173 to $175 dressed in the North), and then sit back and watch the board for at least an hour or two. They’ll no doubt be hoping that significant board weakness will help their cause.
Yet if futures don’t cooperate that way, or even manage to move higher, packers may soon be forced to start hiking bids toward country asking prices of $115 live and $183 dressed.
An extension of the impasse could certainly be pushed into Friday, but we’re guessing that short-bought buyers need to make something happen sooner rather than later. Live and feeder futures are likely to open on a mixed basis as traders position before the development of cash news.