Cattle: Higher Futures: Mixed Live Equiv: $214.23 +$0.38*
Hogs: Steady Futures: Mixed Lean Equiv: $83.83 -$0.29**
*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 are chomping at the bit to see higher cash cattle again this week. Cash is not expected to jump as much as it had last week, but feedlots are holding for more. Cash activity is expected to take place Thursday ahead of the holiday weekend. Boxed beef prices have been higher so far this week with choice up $0.68 and select up $0.21 Wednesday. It seems as if the greater demand for Easter this year is beef rather than pork. Weekly export sales Thursday morning will be noted, but likely will have little influence on futures trading activity. Markets will be closed Friday in observance of Good Friday.
Hogs fell again Wednesday with June making a new contract low and July and later contracts leaving a chart gap on the opening. Packers have not been aggressive this week and have been able to purchase supplies without difficulty. Slaughter this week will be lighter as some plants will be dark on both Friday and Saturday. Others will be operating on Friday but will be dark Monday. Saturday slaughter is estimated at 10,000 head. The National Direct Afternoon Hog report showed cash down $0.80. Closing cutout prices averaged $76.56, down $0.29. Weekly export sales will be released Thursday morning, which may have some impact on the market if sales are strong. Markets will be closed Friday.
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Feedlots rejected lower packer bids Wednesday and are asking $1.00 to $2.00 higher. Trade is expected Thursday.
Higher priced beef may meet consumers' resistance if greater concern over the economy develops.
Boxed beef continues to show strength with higher prices so far this week. Packers will need to step up to satisfy demand.
Cattle futures have not been able to move to new highs despite strong boxed beef prices this week. These high prices may not be able to be maintained.
Lower pork prices should stimulate greater demand. With the increase of concern over the economy, consumers may look to less-expensive pork.
A new contract low for June hogs does not bode well for the market. Funds are in control and sell any price strength that develops.
July and later contracts left chart gaps on the open Wednesday. Those gaps should be filled at some point.
Both cash and cutouts have been struggling this week. Weak fundamentals will not trigger short-covering or turn the trend higher.
For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CST. Also, stay tuned to our Quick Takes throughout the day for periodic updates on the futures markets.
Robin Schmahl can be reached at email@example.com
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