The bounce higher in cattle futures Thursday took away many of the fears that a strong bearish trend may be developing across the complex. This should leave limited but supportive market moves early Friday.
Cattle: Steady to Higher Futures: Mixed Live Equiv $154.46 -0.89*
Hogs: Lower Futures: Lower Lean Equiv $91.89 +0.02**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Although additional cash cattle trade is still expected to be seen during the day Friday, the tone of the market is likely to be have been set by light to moderate trade trickling in over the last two days. Trade in the South developed Wednesday at $115 per cwt, while Northern dressed trade held $182 per cwt. These prices are generally steady to $1 per cwt higher than last week, and indicate a firming trend still develops through the complex.
The break away from the $2 and higher gains per week seen over the past few weeks may curb market bullishness. But one can argue that the more stable and gradual price support remains more sustainable and is better for long term market movement as it limits price volatility. Futures trade are expected mixed to mostly higher. The ability for traders to earn back much of the previous losses created a calming effect across the complex, allowing traders to look for renewed long-term support.
Seasonal pressure through the upcoming holiday season seems to be the major sticking point that should limit further growth over the next couple of weeks. The recent price swings through the week appears to have set a firm $2 to $3 per cwt trading range which traders may feel more comfortable, that could reduce the concern of a major correction developing over the near term. Friday slaughter runs are expected at 117,000 head.