Cattle futures remain extremely cautious heading into the week as traders try to adjust long-term market direction following holiday week gains. Continued pressure is likely to develop in lean hog futures as questions of trade deal progress with China continue to loom over the market.
Cattle: Cash Steady Futures Mixed Live Equiv $150.68 +0.85*
Hogs: Cash Steady Futures Mixed Lean Equiv $86.82 +1.01**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle interest remains subdued Tuesday morning following a normal Monday schedule of inventory taking and showlist distribution. Generally, showlists were steady to slightly lighter than the previous week, which is interesting given the general light market movement over the Thanksgiving holiday week.
Packers are expected to need additional cattle over the upcoming weeks, not only to account for current demand, but plan ahead for the reduced processing schedules during the Christmas and New Year’s holidays. Bids and asking prices are expected to start to develop over the next couple of days, although active trade may easily be delayed until Thursday or Friday.
Given the continued need to supply current beef demand and aggressive packer margins, it is likely cash markets are pointing to steady-to-higher price levels by the end of the week. Futures trade is mixed in limited activity with spillover pressure from Monday’s losses still fresh in the minds of many traders.
The firmness expected in cash cattle trade as well as elevated beef values are likely to point to firm follow-through support through the month of December, although a market correction is likely after setting contract highs last week. Tuesday slaughter runs are expected at 118,000 head.