Cattle futures are expected to remain under pressure Tuesday morning following Monday’s limit losses, which left trade generally undeveloped due to initial pressure. Expanded trade limits will allow additional aggressive losses.
Cattle: Lower Futures: Lower Live Equiv: $141.45 +1.85*
Hogs: Lower Futures: Mixed Lean Equiv: $ 95.05 -0.25**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cattle markets remain in turmoil following the fire that partially destroyed the Kansas beef packing plant. This is expected to keep cash markets undeveloped over the near future, as packers and feedlot managers are likely unwilling to even venture to offer a bid or asking price. With futures trade in live cattle and feeder cattle moving to limit losses as soon as markets opened Monday, the inability to trade through the day created additional uncertainty.
This leaves no indication of how many sell orders are still out there to still be implemented when markets open Tuesday morning. Live cattle futures will be limited at $4.50 per cwt, while feeder cattle trade limit will be $6.75 per cwt. The concern is that although this reduction of plant capacity will likely be bullish for overall beef values, cattle prices may see additional pressure based on limited packer availability and current supplies of cattle in feedlots, or going to feedlots.
This move not only focused on growing fundamental concerns, but the early week moves also took out significant technical support in the cattle complex.