Light-to-moderate spillover support is expected to trickle back into lean hog and feeder cattle futures as traders try to build on early week support and distance themselves from recent market pressure.
Cattle: Steady to Firm Futures: Mixed Live Equiv: $153.75 +0.48*
Hogs: Lower Futures: Higher Lean Equiv: $ 89.84 -1.28**
* 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 is expected to remain quiet once again Tuesday morning, although both sides are expected to become more aggressive given the limited movement in negotiated cash cattle trade the last two weeks. The rally in wholesale beef values last week, where choice cuts rallied over $22 per cwt, is expected to stimulate additional buyer support through the week.
It is expected that the downside move last week was overly aggressive, which will likely help to stimulate additional upside movement through the week and likely the end of the month. Futures trade is expected mixed in limited early morning activity. Once again feeder cattle trade will remain heavily influenced by grain trade.
Although there still remains potential downside moves in the corn market, the uncertainty of current corn crop status and how this will relate to overall total production levels will be a major focus in the next few weeks. Even though the cattle complex remains oversold, the inability to find traders willing to actively jump into this market at this point will likely keep prices from aggressively breaking to the upside in the near future.