Follow-through pressure is expected early on Monday after triple-digit losses in cattle and hog futures Friday. Limited early volume may allow for short-covering, but the general tone of the market is expected to be weak.
Cattle: Steady Futures: Lower Live Equiv: $141.75 +0.78*
Hogs: Steady to $1 Lower Futures: Mixed Lean Equiv: $ 81.72 -0.71**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle interest is expected to remain limited Monday morning with packers and feeders busy with showlist distribution and inventory taking. Bids and asking prices are not expected through the day. The limited trade reported last week should still keep packers short bought. This is likely to stimulate activity earlier in the week than last week, although the volatility in futures trade and beef values will likely limit early-week interest.
Futures trade is expected to open mostly lower, although a combination of follow-through liquidation is likely with moderate short-covering following the triple-digit losses Friday. The increase in cattle inventory in feedlots at the beginning of the month is likely to add to the underlying market pressure with total cattle on feed at 102% of year-ago levels.
This is above market estimates before the report. The combination of underlying weakness in the complex last week as well as growing cattle numbers is expected to put firm pressure on the entire complex.