DTN Livestock Open: Market Uncertainty Remains Prevalent

    Cattle appear to be in trouble technically, but fundamentally, there is good reason to believe the recent weakness of futures will be temporary. Strong demand should provide support. Hogs have had a much-needed price retracement to relieve the extreme overbought market. It is unclear if current cash is sufficient to cause traders to aggressively buy back into the market Wednesday.

    Cattle: Higher Futures: Lower Live Equiv: $200.75 -0.57*
    Hogs: Steady Futures: Higher Lean Equiv: $119.03 +2.39**
    * based on formula estimating live cattle equivalent of gross packer revenue.
    (The Live Cattle Equiv. Index has been updated to depict recent changes in live cattle weights and grading percentages.)
    ** based on formula estimating lean hog equivalent of gross packer revenue

    GENERAL COMMENTS:

    Cattle futures do not look healthy after the past few days and especially since June and August contracts closed below support of the 20-day moving average. Traders have not found a reason to step back into the market.

    Boxed beef was mixed, providing some cause for concern. It is unclear what bids and offers will be posted for cash, but these should surface Wednesday. Feedlots are a bit unnerved by the substantial decline of futures after the strong increase of cash last week. Feedlots will ask higher prices, but will they receive them?

    Packers are hoping to see some interest in selling at last week’s prices or only $1.00 or $2.00 higher rather than a repeat of last week. Packers will need to purchase cattle as demand remains strong even though boxed beef settled mixed Tuesday.

    The strong increase of corn prices Tuesday may keep feedlots interested in moving cattle rather than play the waiting game.

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