Limited early-morning activity is expected, but a firm undertone is likely to redevelop in lean hog trade as traders focus on technical buying midweek. Cattle futures remain firm, but limited short-term upside market may subdue early buying activity.
Cattle: Steady Futures: Mixed Live Equiv $154.32 *1.31*
Hogs: Mixed Futures: Higher Lean Equiv $93.38 +2.19**
* 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 remains generally quiet early Wednesday morning with asking prices and bids still hard to fully pin down for the week. The underlying support in boxed beef values and lack of deviation from the current market support in futures trade is pointing to the expectation of higher cash cattle trade through the end of the week. Both sides are unwilling to fully put a foot on base at this point, although the underlying support would suggest another $1 to $2 per cwt rally is very possible by the time dust settles Friday.
Trade is likely to be delayed until later in the week with some Friday trade almost expected at this point following the trend of cash market activity not wrapping up until late in the week. Futures are expected mixed in limited morning activity. There continues to be underlying firm buyer support near the current price levels as traders continue to hold prices at or near market highs for this market trend.
With prices at the highest levels since spring, the focus on December contracts being able to move above and hold $120 per cwt has become the most recent hurdle. A move above this level is likely to create additional market momentum although aggressive buying above these levels are expected to be limited in the near future due to the traditional seasonal pressure seen through the holidays. Wednesday slaughter runs are expected at 118,000 head.