Cattle and hogs diverged Tuesday as cattle fell and hogs climbed. Cash trading was not tested in the cattle market while hogs had some aggressive purchasing by packers at higher prices. A similar situation could develop again Wednesday.
Cattle: Steady Futures: Lower Live Equiv: $197.38 -0.19*
Hogs: Higher Futures: Mixed Lean Equiv: $127.10 -1.51**
* 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
The cattle complex was under some pressure due to higher grain prices Tuesday. Along with that was the lack of any cash activity that would solidly indicate prices for the week. There were a few cattle traded at steady money with last week, but packers seem to be resisting feedlot asking prices.
Lighter weights indicate feedlots are current with marketing. However, this in not concerning packers due to them already having some purchased ahead, allowing them to be less aggressive with buying. Cattle futures are unable to find support as boxed beef prices continue to decline with choice cuts down $1.61 and select cuts down $0.91. Packer margins remain strong, but they will not be charitable either.