Firm pressure late last week in all livestock futures is likely to bring about follow-through selling Monday morning. The weaker tone in hog futures has traders searching for longer-term support levels.
Cattle: Steady Futures: Mixed Live Equiv: $143.34 -0.44*
Hogs: Steady to $1 Lower Futures: Lower Lean Equiv: $ 88.20 +0.18**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle trade late last week appears to have been extremely light, which should leave packers extremely short-bought for this week. This is not new for most packers, as they seem to be able to maintain steady procurement levels even though negotiated trade numbers remain light. The lack of active trade last week could spark earlier movement this week as packers try to pull cattle forward through the last half of the month.
That being said, most of the activity Monday is likely to be showlist distribution and inventory taking, with bids and asking prices undeveloped. Mixed trade is expected in live and feeder cattle futures early Monday morning following moderate to firm pressure through the end of last week. Traders will continue to focus on the direction of corn prices.
Feed prices have the most direct impact on feeder cattle production costs as traders and buyers utilize break-even levels to estimate purchase prices of cattle moving to feedyards. The expectation that cattle supplies will continue to remain strong through the rest of the year is also adding underlying pressure to the entire complex.