Traders finally found what they were looking for in the cattle complex. Higher cash trade gave them the confidence to adjust futures higher. Feeder cattle posted strong gains as calves traded significantly higher. Hogs were able to hold in most contracts, except December. Cash put pressure on the nearby contract as it needs to move with cash.
Cattle: Higher Futures: Mixed Live Equiv: $208.63 -$1.33*
Hogs: Steady Futures: Higher Lean Equiv: $96.57 +$5.17**
*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
Export sales initially set a slightly bullish tone to the market with sales of 25,500 metric tons (mt), 23% above last week. However, the push came from higher cash trading as this gave traders the confidence needed to buy into futures more aggressively. The anticipated $1.00 to $2.00 higher did materialize in the South, while dressed cattle in the North traded $3.00 higher. Packers are in a position where they cannot hold out as they do not have much forward contracted.
This hurts a little as boxed beef prices have been declining all week. Thursday, choice cuts were down $2.31 with select cuts down $0.90. Friday, traders are looking ahead to the Cattle on Feed report, which may keep futures sideways as traders position themselves for the report. The estimate for placements on the Cattle on Feed report is 102.2% of a year ago. Marketings are estimated at 96.3% with on feed numbers 99.8% of a year ago.