As the week continues, traders appear to be less in a panic mode than what drove limit losses in cattle and hog futures early in the week. Even though there seems to be more thought and perspective in the market early Wednesday morning, the tone of the market still remains extremely weak.
Cattle: Steady Futures: Mixed Live Equiv $143.01 +0.08*
Hogs: Steady Futures: Mixed Lean Equiv $ 80.87 -1.38**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle trader remains dead in the water heading into the midweek session. With the aggressive losses seen in futures trade over the last several days, the concern that the underlying bearish tone of the market will significantly affect packers’ desire and ability to offer cash values anywhere near steady money through the end of the week.
Although packer and feeder interest has still remained generally quiet, it is expected that when cattle are priced, initial asking prices will be higher based on packer’s needs to fill procurement levels during early February. But it may be Thursday or Friday before bids are seen, and may be a late Friday afternoon affair in getting cattle sold.
Futures trade is expected mixed early Wednesday with live cattle futures appearing to remain generally oversold given the aggressive losses Monday and lackluster interest Tuesday while moderate support slowly trickled into the rest of the complex. The cattle inventory report is due out Friday, with early expectations of a 1% drop in levels from last January.
This could give an overall firming support to the market, although it is important to remember that this report focuses more on long-term market direction due to the gaps between reports. But it still helps to give a good long-term view of the overall size of the beef herd. Wednesday slaughter runs are expected near 122,000 head.