Following early week support in lean hog and cattle trade, prices may have turned the corner from bearish market shifts last week. This could help rekindle buyer support early Wednesday.
Cattle: Steady to Firm Futures: Higher Live Equiv: $154.62 +0.87*
Hogs: Lower Futures: Higher Lean Equiv: $ 88.77 -1.07**
* 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 continues to remain undeveloped going into the midweek session with both sides looking for additional direction. Given the aggressive rally in beef values over the last 10 days, feedlot managers are even more unwilling to back away from initial asking prices.
Packers continue to focus on the reduced packing capacity due to Tyson’s plant shutdown in Kansas, but if the weekend schedules increase, most if not all of the production losses likely will be made up. Packer bids are expected to become more evident through the day, although at this point, trade may not develop until later in the week, potentially after Friday’s Cattle on Feed report.
Futures trade is expected mixed to mostly higher with follow-through gains developing after the positive close Tuesday afternoon. Although the market still remains under the shadows of the bearish market shift last week, traders are starting to break away from market lows, with additional potential to push prices moderately higher in the near future.