The bounce higher in lean hog futures comes with limited new fundamental market information available to the complex. Continued moves higher in nearby lean hog trade Thursday will look for further market support.
Cattle: Steady Futures: Mixed Live Equiv $143.88 -0.20*
Hogs: Steady Futures: Higher Lean Equiv $ 83.66 +0.55**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle activity broke lose Wednesday afternoon with light-to-moderate trade developing in the South. Trade ranges were wide, from $119 to $124 per cwt, although most trade developed at $124 per cwt, which is fully steady with last week’s prices. The stability in the market will go a long way in helping create further market support through the end of the week and likely the rest of January.
Although a few cattle traded in the North, it is too early to determine where price levels will fall or call a market trend due to the limited activity. More interest is expected in the next two days, but it would not be surprising if some trade does not develop until after the Cattle on Feed report is released Friday afternoon.
Early expectations are that total on feed numbers will shift higher 1% to 2% with the average estimate 2.2% higher than year-ago levels. Estimated December cattle placements are expected to be 3.2% above year-ago levels, while December cattle marketing is pegged at a 5.2% increase from 2018 levels. The continued lack of support in live cattle and feeder cattle futures is creating lackluster interest in the complex.
This may add increased uncertainty, although there is limited expectation of strong follow-through pressure developing in live cattle trade over the near future. Feeder cattle futures on the other hand, have continued to weaken as traders near support levels, so there is the potential for increased softness to develop through the end of the week. Thursday slaughter runs are expected near 122,000 head.