DTN Early Word Livestock Comments 10/17 06:20
Hog Futures Poised To Retest Highs Thursday
It was not unexpected that cattle futures struggled Wednesday as further
liquidation needed to be done to correct the overbought market. Traders were
also concerned over cash potential. Hog futures did an about-face, eliminating
the losses of the previous two days.
Robin Schmahl
DTN Contributing Analyst
Cattle: Higher Futures: Mixed Live Equiv: $230.85 +$1.19*
Hogs: Lower Futures: Higher Lean Equiv: $100.85 +$0.45**
*Based on the formula estimating live cattle equivalent of gross packer
revenue. (The Live Cattle Equiv. The 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:
There was no cash trading activity in cattle Wednesday and none was
expected. Futures tried to turn higher but slipped lower in most contracts. It
seemed traders were uncertain about higher cash this week. However, the
continued strength of boxed beef may require packers to increase bids to
purchase cattle. The packers cannot ignore the fact demand is good and needs to
be met. Feedlots have posted offers in the South at higher prices and may be
able to achieve those prices. Boxed beef was higher with choice up $2.30 and
select up $0.28. The feedlots may increase their resolve to hold another week,
knowing packers cannot afford strong demand and the need to increase the
slaughter pace. The demand for feeder cattle remains strong with tighter
supplies and the desire to maintain cattle numbers on ranches and feedlots.
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