DTN Livestock Open: Futures Hold Support

    Photo: Blair Fannin, Texas AgriLife Extension

    The pressure on cattle futures finally stopped Tuesday, but not until new lows were made for the recent downtrend, as support was tested. The market was oversold and needed to correct. Hogs continued to show pressure on earlier months finishing out three days of liquidation. Cash was finally higher again.

    Cattle: Lower. Futures: Mixed. Live Equiv: $208.22 +$1.53*
    Hogs: Steady. Futures: Higher. Lean Equiv: $88.41 -$4.80**
    *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.

    GENERAL COMMENTS:

    Traders have been in a dilemma this week with slower slaughter and the potential for lower cash being offset by strong boxed beef prices. Logically, this would go hand in hand. If production is lower and demand remains strong, supply will tighten, which increases price as in the case of boxed beef. The problem is not that there are fewer cattle, but the inability of getting them processed. This leaves more cattle available in the country that are putting on more weight.

    Feedlots want higher prices but do not want to hold market ready cattle very long. The result is what took place Tuesday, as steady to $1.00 lower packer bids in the South were quickly taken before those bids are filled and possible lower bids will follow. Fortunately, trading activity was light which did not provide a good representation. Boxed beef was higher with choice up $2.18 and select up $2.13.

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