Cattle moved higher as expected due to the report on Friday, but it was a bit disappointing that futures were not able to move higher than they did. Hogs struggled all day with the exception of December, which held gains likely due to spread trading.
Cattle: Steady Futures: Mixed Live Equiv: $211.88 +0.64*
Hogs: Steady Futures: Mixed Lean Equiv: $101.55 -3.69**
*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 were the recipients of the friendly Cattle on Feed report, but gains were limited. Futures moved back to where they had been the day before the report. There are still a lot of cattle that will be available to the market over the coming months. The strength is not going to come from the report but from increased demand and more positive cash and boxed beef prices.
Monday, boxed beef was higher with choice up $1.22 and select up $0.08. Traders will need to see this continue as evidence of increasing demand. There was no indication of cash potential this week as bids or offers have not been posted. However, showlists appear to be light.
The inability of futures to push higher than they have may leave packers unwilling to bid higher than steady money again this week. The Commitment of Traders report showed funds adding to their long positions by 9,258 contracts increasing their net-long positions to 44,727 contracts.