Cattle held well Wednesday in the anticipation of higher cash trade this week. Boxed beef continues to march higher. The confirmation of African swine fever in the Dominican Republic sent concern through the market, causing hog futures to plummet. The sell-off was likely not warranted, but a knee-jerk reaction that may be difficult to overcome.
Cattle: Higher Futures: Mixed Live Equiv: $203.28 +$2.26*
Hogs: Lower Futures: Mixed Lean Equiv: $131.78 +$1.48**
* 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
Live cattle futures tried valiantly Wednesday to regain what was lost Tuesday, but to no avail. Cash did not provide any solid direction, but the few that did trade were $1.00 to $3.00 higher. Packers are reaping greater benefit from higher boxed beef prices but will be reluctant to pass this along by increasing their bids. Feedlots have been holding firm with higher asking prices, which they fully expect to get by the end of the week.
There is some concern developing over the rise of COVID cases again and how that might impact demand. Some renewed restrictions may result in some impact on demand, but there is no indication of another economic shut down. Thus, this is something to think about, but not dwell on. Weekly export sales will be released Thursday morning, which may provide some initial market direction until there is more volume of cash cattle traded.