Firm gains in cash cattle trade late last week is expected to put increased focus on follow-through support as traders head toward the holiday season. Limited early trade is likely Monday morning as traders balance fundamental support with outside market moves.
Cattle: Steady Futures: Mixed Live Equiv $146.20 -0.60*
Hogs: Steady to higher Futures: Mixed Lean Equiv $ 87.05 +0.72**
* 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 is expected to return to a normal Monday routine of showlist distribution and inventory-taking following last week’s cash cattle trade on Thursday and Friday. The underling firmness in the cash cattle market pushed Southern live cattle prices to $119 to $119.50 per cwt, mostly $119 per cwt and a $1 per cwt gain from the previous week.
Northern trade didn’t fully develop until Friday with trade mostly $188 on a dressed basis with a full range of $187 to $190 per cwt. The trend is $1 per cwt higher than the previous week and is expected to spark increased bullishness from feedlot managers when pricing cattle through the week.
There are only two full weeks of trade left in the year before moving into the holiday-shortened trading schedules, which means that both sides will be planning ahead in order to get numbers in order for month end. Futures trade is expected to remain mixed early Monday morning, although the late week firmness in live cattle and feeder cattle trade has helped to offset any growing concern of a major correction during early December.
Continued pressure in boxed beef values last week has added some uncertainty to the complex, both limiting plant margins and raising questions about the ability to continue to move beef at current price levels through the end of the year. But trades continue to focus on supply tightness over the upcoming months, and so far, have been unwilling to back away from the bullish market undertone as live cattle futures remain in a narrow trading range, unwilling to move too far away from recent contract highs. Monday slaughter runs are expected at 121,000 head.