Wednesday was another day of cattle posting strong gains while hogs fell. Both markets might be overdone based on their respective moves. It is uncertain where traders may step back in and buy the break in hogs or if they will yet this week.
Cattle: Steady Futures: Mixed Live Equiv: $240.80 -$1.63*
Hogs: Higher Futures: Mixed Lean Equiv: $129.23 -$6.17**
* 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 have certainly been on a roll with August and later contracts again posting new highs. Cash traded Wednesday similar to Tuesday with cattle in the South $122 to $123, $2.00 higher than last week, while the North traded $193 to $197, $4.00 higher than last week. It is surprising packers are not using faltering boxed beef as leverage to bid lower. However, they need cattle and are paying up to get them.
Boxed beef fell dramatically Wednesday with choice cuts down $5.26 and select cuts down $8.32. When cash trades higher early in the week, it is a good sign as cash trade did not need to hold out to see whether buyers or sellers blink first.
The market will be watching any progress that might be made on the resumption of exports of beef from Argentina as they continue to work on policies for reopening those exports. Weekly exports may have some influence on futures trading Thursday, but not likely any influence on cash for the rest of the week.