Live cattle futures made a nice comeback Monday with August able to close slightly higher while later contracts trimmed their losses, resulting in only minor declines. Activity was confined to window dressing as bids and offers were posted with no activity as usual early in the week.
Early indications are that cash should be no worse than steady this week. Hogs were the recipients of spread trading Monday, which provided some nice support for later contracts. February showed the greatest gain as optimism builds for next year.
Cattle: Steady to Higher Futures: Higher Live Equiv: $136.85 +0.05*
Hogs: Steady to Higher Futures: Mixed Lean Equiv: $ 77.76 +1.25**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Due to higher cash trade last week, feedlots are resolved to hold out for higher prices this week. Cattle futures tend to support that idea with August making a new high for the recent trend. Good packer margins may cause buyers to be a bit more willing to make sure business gets done even if it means paying a little more.
Cash cattle trading is not expected to take place Tuesday. Mixed cutout prices do not provide much direction. Technically, the market is in an uptrend, but it is in overbought status, which could trigger some profit-taking.