Limited new direction is expected early Tuesday morning with the weaker undertone remaining across hog futures, while cattle trade is expected mixed in a narrow range.
Cattle: Steady Futures: Mixed Live Equiv $145.65 -0.55*
Hogs: Steady to higher Futures: Mixed Lean Equiv $ 86.95 -0.10**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Despite the Christmas holiday just a couple of weeks away, cash cattle markets are following the weekly script with limited interest likely to develop early in the week. Packers continue to focus on increased overall cattle moving through the system following the higher cash cattle markets last week.
Feedlot managers are likely to remain even more aggressive when cattle are priced the next couple of weeks in order to take advantage of the positive cash market momentum of the last several weeks. Both sides are abundantly aware of tighter supplies just around the corner, which gives packers incentive to put as much beef away at current or slightly higher cash prices as possible despite the eroding beef values.
Cash cattle bids are not likely until midweek or later with a late week trade event likely at this point. Futures are expected mixed with traders potentially remaining a little too comfortable with the current trading range heading into the holiday season.
With Christmas and New Year’s holidays landing in the middle of the week, it is uncertain just how this will affect not only trade volume but overall market mentality through the end of the year. When holidays are in the beginning or end of the week, a “long weekend” is typical, but markets seem to be more disruptive during midweek holidays, with limited scattered trade throughout the week, rather than a couple of days.
Cattle market direction still remains split between short- and long-term direction with nearby futures still concerned about current availability of market-ready cattle, while increased premium is being placed in the spring and summer contracts based on potential tighter supplies.
Most of the supply tightness is expected to be limited to the first quarter, but current packing capacity could keep packers aggressive through the first half of the year, depending on demand support during early 2020. Tuesday slaughter runs are expected at 120,000 head.