Market cautiousness is seen early Thursday morning following abrupt triple-digit losses seen midweek. The swift shift lower can’t be seen as a surprise following the potential for a correction over the last several weeks, but it doesn’t make the market pressure any easier.
Cattle: Steady to Higher Futures: Mixed Live Equiv $155.35 +2.34*
Hogs: Mixed Futures: Lower Lean Equiv $91.87 -1.51**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
The majority of cash cattle trade is still yet to develop over the next two days despite light trade seen in the South Wednesday as prices settled mostly at $115-per-cwt live basis. These prices are generally steady to $1 per cwt higher than last week’s levels, but the biggest question will be if continued cash market support will develop following the shift in futures direction.
The continued aggressive moves in boxed beef values continue to suggest that even more aggressive support is to be had due to strong packer margins as they try to keep plants full in order to process as many cattle as possible at current prices. But the change in direction of futures trade will likely create lower bids in an attempt to limit spending increases through the week.
Futures trade is expected mixed as a combination of short covering and follow-through selling is likely through the early minutes of trade. The general weaker tone that started to develop Wednesday is likely to limit upside market support through the day, although the underlying tone of the market still remains firm as long as prices remain within range of the recent market highs. Thursday slaughter runs are expected at 118,000 head.