Hog futures seem set to open at midweek with at least moderate strength, supported by follow-through buying and appreciating carcass value. On the other hand, the cattle complex should open lower, pressured by residual selling interest and lower cutouts.
Cattle: Steady-$2 LR Futures: 50-100 LR Live Equiv $159.96 -1.16*
Hogs: Steady-$1 HR Futures: 50-100 HR Lean Equiv $ 95.64 +1.59**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Assuming that cattle buyers would like procurement chores completed by Thursday night, it seems like a good bet that packer inquiry will start to take shape Wednesday. Perhaps late-morning results tied to FCE business will nudge country trading in one direction or the other.
Our guess is that asking prices will start out around $136 in the South and $215 plus in the North. Live and feeder futures should open moderately lower Wednesday, initially checked by follow-through selling and eroding carcass value.