Live cattle felt the pressure Tuesday of the outside markets as greater uncertainly surrounds the omicron virus strain. This may impact the level of cash packers are willing to pay for cattle. Hogs again did some unwinding of spreads with front-month December being the recipient of buying due to a nice increase in cash.
Cattle: Higher Futures: Mixed Live Equiv: $204.02 -$3.51*
Hogs: Higher Futures: Higher Lean Equiv: $93.51 -$1.01**
*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
Tuesday was the second day of long liquidation as the uncertainty surrounding the omicron virus variant and its impact on demand has traders taking profits or limiting losses. The market had been overbought and in need of a price correction on its own, but the news surrounding the omicron virus variant triggered further liquidation.
In the long run, it should not have much impact as we can well remember the increase in demand for meat last year. However, boxed beef prices plummeted Tuesday with choice down $5.90 and select down $1.73. That may leave packers a bit more on the defensive this week. They may still need to increase cash bids to procure cattle, but they may not be as aggressive as last week.
There continues to remain a strong demand for feeder cattle as prices for calves and feeders were strong Tuesday.