The development of cash cattle trade Tuesday with prices $1 to $2 per cwt lower than last week is adding to concerns about follow-through market weakness in the cattle complex.
Cattle: Lower Futures: Mixed Live Equiv: $138.76 -0.42*
Hogs: Steady Futures: Mixed Lean Equiv: $ 68.87 +0.31**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Live cattle continue to struggle both in the country as well as on the board. It is difficult to determine if futures are leading cash lower or if cash weakness is pulling futures lower. The market is firmly in a bearish grip with new lows in futures set Wednesday since the highs of late last year.
The market may be feeding on itself with weaker futures prompting packers to lower bids. With lower cash, traders continue to sell into the market. Futures are oversold, but it may remain that way for a time based on the movement of underlying cash.
Cash cattle traded in the South Wednesday $1.00 to $2.00 lower than the previous day, which was already lower than last week. Cutouts are not helping with prices lower again Wednesday.
Hogs continued to struggle, posting another lower low for the week. Technically, hog price charts look more promising than cattle charts. However, there are a lot of hogs coming to the market and will be coming to the market with product needing to find a home.