Weakness continues to plague the cattle market. After 10 days of liquidation, the market should be ready for a bounce; but something will need to trigger that change. Cash cattle trading higher Wednesday was not enough. Hogs are holding but will need to see further support from cash and cutouts soon or lower prices could unfold.
Robin Schmahl DTN Contributing Analyst
Cattle: Steady Futures: Mixed Live Equiv: $243.92 -$0.99*
Hogs: Higher Futures: Mixed Lean Equiv: $117.83 +$4.73**
* 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 followed a similar pattern Wednesday as the previous day with futures showing initial strength only to succumb to further selling pressure. Traders are attempting to pick a bottom but continue to be overrun by the weakness. Market fundamentals are not supportive for a bottom, much less a change in trend. Boxed beef declined again Wednesday with choice cuts down $0.33 and select cuts down $3.73. The bright spot was cash cattle prices for both live and dressed were generally $1 higher than last week. Increasing COVID cases has the market nervous about demand. Demand generally slows after Labor Day, but COVID worries may be adding further pressure as traders perceive the possibility of lower demand. Eventually, the market will be overdone to the downside and price will correct; but the market is currently in a long-liquidation phase.