The livestock complex extended gains Tuesday, but those gains stemmed from the optimism of traders and not from underlying cash. Futures were low enough to entice traders to step in on the anticipation of the trend turning back up.
Cattle: Steady Futures: Mixed Live Equiv: $212.12 +3.26*
Hogs: Steady Futures: Higher Lean Equiv: $134.48 -1.04**
* 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 showed further strength Tuesday driven by the hopes that cash cattle will trade higher this week. Feedlots are offering upwards to $2.00 higher in the anticipation that soaring boxed beef prices will bring packers to the table more aggressively. Cattle trade may not develop until later in the week as packers may want to wait it out.
Strong futures gains Tuesday may influence packers to some degree as they determine what type of leverage they may have going forward. Marketings are current and the continued increase of boxed beef prices may result in higher bids and higher trade. Boxed beef jumped $4.84 for choice cuts and $4.11 for select cuts. Demand looks favorable heading into Labor Day.