Active pressure in cattle futures Wednesday left the market looking for late-week stability. Although losses have done little long-term technical damage at this point, the concern of a changing trend is adding increased anxiety through the complex.
Cattle: Steady Futures: Lower Live Equiv $147.87 -1.71*
Hogs: Steady to higher Futures: Mixed Lean Equiv $ 85.97 +0.39**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
The direction of cash cattle markets has not yet been established for the week with just a few cattle sold midweek in parts of the South. Although the sold cattle were priced at $119 to $119.50 per cwt, the lack of volume makes overall test too light to establish an accurate trend. It is expected that packers will become more aggressive through the day Thursday, although active trade may still not develop until late Thursday or early Friday.
The focus throughout the complex continues to be based on increased packer needs with Tyson’s Kansas plant ramping up production. Although this week’s numbers will not show significant gains on a day-to-day basis, the focus on keeping plants full given current margins is strong incentive for packers buy cattle at steady-to-higher price levels.
Futures trade shifted lower Wednesday, with triple-digit losses in all nearby live cattle and feeder cattle trade. Although the losses brought about increased anxiety, the fact that live cattle futures have held firm gains through the last couple of weeks is currently keeping prices contained in a sideways price shift.
With February futures at $124.17 per cwt, prices are still holding above initial support levels of $123.85 per cwt. If markets can maintain these support levels through the end of the week, limited short-term downside pressure is expected.
Given the wide price swings in feeder cattle futures during November, even the strong losses this week have kept the complex within a wide, but sideways trading range. Thursday slaughter runs are expected at 120,000 head.