Livestock futures are quickly gaining ground through the week as limit cattle gains is expected to spark follow-through buying early Wednesday morning. Combined outside market support paired with firming fundamentals is propelling prices higher.
Cattle: Higher Futures: Higher Live Equiv $166.91 -0.29*
Hogs: Higher Futures: Higher Lean Equiv $ 86.90 -1.46**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle trade still remains generally limited going into the midweek session, but the tone has significantly changed over the last week with feeders aggressively focusing on taking advantage of the market rally both in futures and beef values over the past week to 10 days, and finally getting a portion of the recent spoils.
Limited trade activity developed Tuesday with dressed prices at $188 per cwt. This is generally $3 per cwt higher than Monday’s light trade, but nearing $13 per cwt ahead of last week’s price levels.
Asking prices remain at $125 and higher live basis and $190 and higher dressed, but if strong follow-through support is seen in live cattle futures, these could quickly be ratcheted higher. There still is a lot of trade that needs to be done before the end of the week, but initial Wednesday bids are likely to redevelop near $120 or higher live and $185 and higher dressed until further clarity is seen.
Boxed beef values Tuesday were mixed with Choice cuts falling for the first time after moving higher for seven consecutive sessions. The continued retail demand support is still keeping meat flying off of store shelves, but if this goes on longer the question is whether high value will meats be able to sustain strong consumer demand.
Futures trade is expected to move higher early Wednesday morning as traders continue to be focused on the aggressive support in stock markets and fundamental strength building in the cash and beef markets. All cattle trade will have access to expanded trade limits once again, allowing for potential wide market swings midweek. Wednesday slaughter is expected at 121,000 head.