DTN Early Word Livestock Comments 10/20 06:37
Initial Weakness Expected in Hog Futures
Traders are not expecting much this week in cattle futures, which will keep
the market choppy. The Cattle on Feed report will be released on Friday and may
keep trading activity sideways until then. Hogs took a beating Tuesday moving
to the bottom of the recent range and likely poised to close the price gap.
DTN Contributing Analyst
Cattle: Steady Futures: Mixed Live Equiv: $210.41 +0.75*
Hogs: Steady Futures: Lower Lean Equiv: $106.28 -1.51**
*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
There is an element of bearishness evident in the market as the outlook
remains somewhat negative. Cattle numbers are higher than earlier anticipated
with the upcoming Cattle on Feed report estimated to continue to show a similar
pattern of larger numbers as the previous report. Yet despite that, live cattle
futures have increased nearly $5.00 over the past three weeks with futures
above the level they were at the previous report last month. The reason is due
to the fact the market needed to return more in line with where it should be
relative to cash. Boxed beef gained Tuesday with choice up $0.79 and select up
$1.72. The recent choppiness of boxed beef may indicate a bottom might for
forming. Cash was quiet Tuesday with packers still on the sidelines. It will be
interesting as to what business will develop with the report looming on Friday.
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