Expected demand for pork in China has sparked additional buyer interest. Cattle futures continue to defend recent market gains despite a pullback in wholesale beef values.
Cattle: Higher Futures: Mixed Live Equiv $137.66 -0.71*
Hogs: Higher Futures: Higher Lean Equiv $68.93 -1.00**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle business started to develop in the South Wednesday afternoon with light trade at $120 per cwt live basis. This is $1 per cwt higher than last week’s average and signifies a break in the lower market trend of the last few weeks.
Feeders continue to look for even higher prices as packers have previously been able to suppress prices despite a tight supply of market-ready cattle through the last six weeks. Business has not yet been seen in the North, with bids still hard to pin down. But asking prices remain at $122 live and $194 to $195 dressed in the North.
With the upcoming Cattle on Feed report, it is possible additional trade may hold out until late in the week, potentially after the Friday afternoon release of the report. Futures trade is expected mixed.
The bullish support in feeder cattle futures has helped support live cattle futures. Despite expectations that feeder cattle placements in January will be above year ago levels, demand for feeder cattle to put into feedlots, as well as light-weight cattle to place on grass through the spring, remains strong, allowing for firming prices in the still oversold market.
The fact that April live cattle futures set February highs Wednesday afternoon, closing at $120.80 per cwt, helps build additional support through the market and likely will stimulate additional gains through the end of the week based on technical support, but may limit momentum through the end of the month.
Even though demand remains strong, the inability of last week’s gains in beef values to hold is causing some concerns that may limit further buying in the near future.
Thursday slaughter is expected near 121,000 head.