Sharp losses in hog futures have quickly turned a weak market even more bearish as traders try to find any sign of support. Cattle markets have continued to firm but may remain unstable.
Cattle: Steady Futures: Mixed Live Equiv: $145.02 +0.09*
Hogs: Steady to $1 Lower Futures: Lower Lean Equiv: $ 64.36 -1.67**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
April live cattle futures have rallied $2 per cwt in the last two trading sessions. This is starting to create uncertainty through the nearby contracts and the entire cattle complex. Each weekly rally in the last two months has been followed by a moderate-to-firm retraction that has pulled prices away from contract highs. This is expected once again, but uncertainty remains as to when buyers will back away from the market.
The sharp losses in hog trade have provided a safe haven for additional noncommercial traders looking for a place to invest, given the landslide in nearby lean hog trade. This trader group could quickly leave cattle futures if a market bottom develops in the hog complex.
Cash cattle trade is undeveloped for the most part, with just a handful of cattle sold in Texas. A wide gap between asking prices and bids will continue to keep packers and feeders at odds until the end of the week.