Wide market shifts in lean hog trade early in the week is expected to spark uncertainty as traders focus on any indication coming out of the trade talks with China starting Thursday. The results of these talks will likely set the direction of each countries’ reaction in future negotiations.
Cattle: Steady Futures: Mixed Live Equiv: $136.80 +1.24*
Hogs: Higher Futures: Mixed Lean Equiv: $ 82.18 -0.30**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle activity is heading into midweek with little direction and asking prices and bids are still not fully disclosed. The light-to-moderate buyer support in futures trade and firmness in beef values Tuesday is expected to help bolster additional feeder resolve as they look to expand the upward market trend the last couple of weeks.
Although packer margins are attractive, the pullback from previous levels is not going unnoticed, which will cause a push to limit country spending. Most cattle trade is expected to be pushed to the end of the week. The developing winter storm system through the upper Midwest has had little impact on overall cattle futures or cash market trade at this point.
Unless the projected storm moves further south, the long-term impact on overall cattle moving to market is not expected to be significant. This may have a bigger impact on moving spring calves to market, which are scheduled to move over the next couple of weeks. The overall impact, although disruptive on a regional levels, is not expected to have a significant impact to the cattle market or cattle numbers as a whole.
Futures is expected to be mixed in light-to-moderate morning trade. The wide ranging price shifts in hog futures is likely to spark some follow-through movement in the live cattle and feeder cattle trade.
Feeder cattle futures have thus far ignored the aggressive corn market gains, but this is not expected to continue long term as feed costs will once again become a major factor in pricing feeder cattle through the upcoming weeks. Wednesday slaughter runs are expected at 117,000 head.