Cash cattle trade is expected to continue with a firmer market tone following initial trade in the North Thursday. The underlying firmness in the market should point to increased activity and price gains in all areas.
Cattle: Higher Futures: Mixed Live Equiv $152.64 +0.85*
Hogs: Lower Futures: Mixed Lean Equiv $ 85.49 -0.30**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Light to moderate trade that developed Thursday afternoon in the North is expected to have set the firmer market tone for the week. The full range of cattle sold Thursday is $177 to $182 per cwt dressed basis, but most cattle sold at $181 to $182 per cwt. This is $1 to $2 per cwt higher than last week’s average, allowing for positive market expectations to develop in all other areas.
The combination of underlying support in wholesale beef values, futures trade and extremely large packer margins is helping to stimulate a healthy appetite to keep plants at capacity through the near future. Futures trade is expected mixed in sluggish early trade as traders continue to struggle to break away from the light to moderate range that has been established over the last couple of weeks.
Even though there remains firm underlying support, the ability to break through short-term resistance levels in live cattle or feeder cattle trade remains uncertain. Given still strong cattle supplies and traditional seasonal pressure through the holidays, it may be difficult to spark aggressive follow-through buying in order to continue to aggressively move prices higher. Friday slaughter runs are expected at 116,000 head.