Limit gains in lean hog trade Tuesday is creating expectations of follow-through support based on reported Chinese buying activity. Underlying bullish support will hold in cattle futures through mid-October.
Cattle: Steady to Higher Futures: Higher Live Equiv: $139.48 +0.75*
Hogs: Higher Futures: Higher Lean Equiv: $ 82.83 +0.12**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Packer interest is expected to improve through the day Wednesday, although the overall lack of consistent asking prices through all cattle country will likely keep trade from developing too quickly this week. Asking prices in the North are holding at $115 live and $180 per cwt dressed in Nebraska, while feeders have yet to float asking prices in the hopes that there will be confirmation to suggest strong support through the end of the week.
When initial bids do develop, it is expected these will be well below asking prices, and will potentially push active trade to the end of the week. Firm support is expected to hold in cattle futures with the focus on December contracts testing short-term highs once again following the steady-but-firm buyer support moving back into the complex.
With nearby contracts holding well above both 40- and 100-day moving averages since the end of September, renewed commercial support is building as well as the potential to spark investment interest, which has remained out of the market the last several weeks. Wednesday slaughter runs are expected at 117,000 head.