Early trade Wednesday morning will determine just how much buyer support remains underneath Tuesday’s market rally. Follow-through buying is expected to be met by market caution given the still unstable market structure when it comes to demand growth and trade talks.
Cattle: Steady to Lower Futures: Higher Live Equiv $145.01 -0.84*
Hogs: Lower Futures: Mixed Lean Equiv $ 76.80 +0.08**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Active triple-digit gains Tuesday afternoon have changed the tone and direction of the market. This move elevated contracts off of contract lows with December and February futures leading the complex higher with gains over $2 per cwt. There is pressure in the complex due to seasonal beef demand slowing and ample cattle in the pipeline the next couple of months, which will limit aggressive market support.
The oversold cattle market may have reached bottom, giving buyers who have been waiting on the sidelines an opportunity to quickly step into the complex, changing the overall direction of the complex. Cash cattle activity is expected to show limited direction Wednesday morning with packers and feeders likely to be slightly more active as the day continues.
Even though bids may start to trickle into the complex, trade may easily be delayed until Thursday or Friday as both sides appear to be set on changing the direction of the cash cattle market in their favor given the volatility over the last week. Cattle slaughter is expected to remain at 117,000 head Wednesday.