There will likely be follow-through pressure in cattle futures due to renewed liquidation Tuesday. Grain prices continue to increase. Pork is in demand with packers remaining aggressive. That may not change anytime soon.
Cattle: Steady Futures: Mixed Live Equiv: $220.88 +$0.98*
Hogs: Higher Futures: Higher Lean Equiv: $117.79 +$0.48**
* 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
Cattle futures fell out of bed Tuesday led by the sharp decline of feeder cattle. As has been the case the past few weeks, cattle traded early with cash cattle moving at $118 to $119 while dressed prices were $190 to $191 and steady with last week. But steady prices just cannot cut it with rising feed prices. Processor margins are around $700 per head as boxed beef prices continue to increase.
High grain prices continue to push cattle producers into selling aggressively and even at lower weights to limit feed consumption. Packers continue to use this to their advantage, as feedlots are anxious to move cattle.
The continued decline of futures is encouraging the liquidation as feedlots see lowering price potential. June cattle futures had been establishing a sideways trading pattern, but support was penetrated Tuesday. The market is oversold, but that is meaningless in this market environment.