The livestock complex had good intentions in early trading Wednesday, but higher grain prices and steady cash activity did not support further gains in cattle futures. The inability of hog futures to extend gains may leave the market vulnerable to selling Thursday.
Cattle: Steady Futures: Mixed Live Equiv: $201.51 -$0.70*
Hogs: Steady Futures: Mixed Lean Equiv: $125.42 -$0.12**
* 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
Livestock futures tried to move higher Wednesday, but eventually succumbed to selling pressure. Feeder cattle declined due to stronger grain prices while live cattle ending slightly lower due to uneventful cash trading and lower boxed beef prices. Packers have not purchased a large amount of cattle so far this week with more activity likely surfacing Thursday.
Even though margins are declining as boxed beef slides, they still need cattle to satisfy demand. Feedlots are current due to lighter weight cattle, which will take more to obtain the tonnage. Weights have trended lower over the past 1 1/2 months.
Generally, weights tend to rise seasonally during this period. Packers likely will continue to work the market at no better than steady cash due to boxed beef price continuing to slide. Wednesday, choice cuts declined $0.46 with select cuts down $2.99.
Weekly export sales will be released Thursday, providing some market direction.