With the weekly Export Sales report released Thursday morning, hog traders will focus on China’s involvement in the market over the last week. Cattle futures are focusing on defending the midweek rally with increased focus moving toward weekly cash trade, which is yet to develop.
Cattle: Steady Futures: Higher Live Equiv Unavailable
Hogs: Steady to higher Futures: Mixed Lean Equiv Unavailable
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle markets are slowly rolling into the last half of the week with both sides focused on extending their positions the next couple of weeks. Feeders still remain aggressive, with asking prices of $121 to $122 per cwt live in the South and $192 dressed in the North. Given the recent erosion of beef values and packer margins the last couple of weeks, it is likely that packers will be willing to let off on the throttle a little through the next couple of weeks. This could result in steady-to-lower cash cattle prices.
The carrot of tighter supplies during early 2020 still remains strong incentive to put as much beef in coolers as possible, as packer margins still remain respectable. But this could change the recent direction of higher cash business in the upcoming weeks. Futures trade is expected to be limited as follow-through buyer support is likely to slowly step back into the complex following the sharp triple-digit rally in feeder cattle trade.
The strong pullback in corn futures Wednesday allowed for increased focus on nearby and deferred feeder-cattle buying. This underlying support trickled through the live cattle market, helping to bring life to what had been a sluggish market affair for most of the week. It is uncertain just how much short-term market support remains in the complex, as limited interest is expected as the holidays quickly approach. Thursday slaughter runs are expected at 121,000 head.