There was quite a divergence between cattle and hogs Friday. Cattle just could not find support into the end of the week due to uneventful cash market. Hogs were likely supported by the news that Germany reported two cases of African swine fever.
Cattle: Steady Futures: Lower Live Equiv: $198.77 -$1.10*
Hogs: Higher Futures: Higher Lean Equiv: $126.70 +$0.45**
* 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 are struggling both technically and fundamentally. The performance of the cash market over the past few weeks does not indicate there will be much change this week. The hope is that cash will trade steady with last week, but there is concern packers may pull back this week.
Boxed beef continues to decline on nearly a daily basis and they already have some cattle on the books for the next few weeks. Packer profits are still good at nearly $380 per head, but they do not like to see that profitability dwindle and will take steps to reduce the bleeding.
Boxed beef showed choice cuts down $1.93 with select cuts down $0.69 Friday. Choice cuts fell $11.23 last week while selects cuts fell $6.01. This week may be slow to develop as feedlots are not really in a position to bargain.
Holding out for higher cash may not net any benefit as packers seem to be in control and in no need to be aggressive.