Look for the cattle complex to open narrowly mixed thanks to a combination of profit-taking and cash uncertainty. The lean hog trade is also likely to lack price direction Tuesday, though nearbys could be better supported than deferreds.
Cattle: Steady-$2 HR Futures: Mixed Live Equiv $131.49 + .48*
Hogs: Steady Futures: Mixed Lean Equiv $ 84.65 – .33**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cattle buyers and sellers are likely to show much energy Tuesday. Indeed, the only sign of competition may be which side can look more indifferent than the other. On one hand, feedlot managers continue to sense a good deal of market clout tied to tight fed numbers (new showlists may be a bit larger than last week thanks to the South, but not by much).
On the other hand, packers are disgusted that processing margins in recent weeks have gone to hell in a hand basket. We expect such posturing will last for another few days, probably postponing significant trade volume until Thursday or Friday.
If asked, we assume bullish-minded producers will start out pricing steers and heifers around $125 in the South and $200 in the North. Live and feeder futures will probably open Tuesday on a mixed basis in slow volume.