The cattle complex is geared ti open moderately higher, supported by follow-through buying and constructive fundamentals. Conversely, lean hog futures are likely to open moderately lower, checked by long liquidation and pork demand uncertainty.
Cattle: Steady-$2 HR Futures: 25-50 HR Live Equiv $137.79 + $1.33*
Hogs: Steady-$1 LR Futures: 25-50 LR Lean Equiv $ 85.84 – $1.46 **
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
The cattle trade will remain in low gear this morning. Indeed, we may bot see much in terms of bids or asking prices until Thursday or later. Again, it’s a good bet that recent cash success will prompt feedlot managers to price ready cattle sharply higher (e.g., $128 plus in the South; $200 plus in the North). Packers seem to be making progress shoring up processing margins by selling boxes sharply higher.
Needless to say, their ability to pass the cost of live inventory along will be a big factor in determining the eagerness of cattle buyers to stay on the spending train. Live and feeder futures are staged to open moderately higher, supported by cash premiums and appreciating carcass value. Remember that spot February live is scheduled to expire at high noon.