Follow-through support is expected in the hog complex early Thursday with traders looking for any sense of hope in the Thursday’s Export Sales report. Cattle futures are expected to be mixed as cash cattle trade has shown additional weakness in early-week trade.
Cattle: $2 to $3 Lower Futures: Mixed Live Equiv: $143.73 -0.45*
Hogs: Steady Futures: Higher Lean Equiv: $ 91.82 -1.83**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Firm market pressure developed in cash cattle trade through the South on Wednesday. This continued the trend of early-week trade, but ongoing pressure has sparked lower cash market prices the last two weeks. Light-to-moderate trade developed in Kansas and Texas at $117 per cwt, which was $3 lower than last week.
Interest in the North is still sluggish but is expected to follow the weaker market trend when trade develops the next two days. Futures activity is expected to be mixed with light follow-through buyer support potentially moving into live cattle trade based on recent market pressure and overall lack of downside market risk.
Open interest is expected to slowly but steadily increase through the end of the week as traders have already exited the market. Significant upside market potential remains over the coming weeks due to strong fundamental demand for beef. But the inability to bring additional active volume may limit short-term support.