Hog futures traded limit higher Thursday and another round of aggressive market support is expected Friday. Cattle futures are mixed but spillover support from the hog complex is likely.
Cattle: Lower Futures: Mixed Live Equiv: $142.25 -0.04*
Hogs: Lower Futures: Higher Lean Equiv: $ 75.28 -1.98**
* 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 started to develop Thursday afternoon with light trade reported as prices in the South appear to be settling around $99 per cwt. This is $1 per cwt lower from last week, while Northern dressed trade is $159 to $160 per cwt, a $6 to $7 per cwt drop from week-ago levels. Although many of the Nebraska sales were sold for delayed delivery in late September, the weaker tone of the market remains the focus despite strong recent upward movement in futures trade at the end of the week.
Some trade is expected Friday, but at this point, it is uncertain if price levels will be able to deviate from earlier levels. Futures trade is expected to be sluggish early Friday with most attention still focused on lean hog trade. The general weakness in cash cattle futures combined with potential softness in beef cutout values may add even more uncertainty to nearby live cattle trade.
October futures remain well under $100 per cwt and without a significant shift in fundamental market direction, may remain in this range through most of September. Traders continue to focus on the readily available cattle in the system through September and most of October, which is likely to add increased short-term pressure. Cattle slaughter for Friday is expected at 116,000 head.