Live and feeder futures should open significantly higher thanks to follow-through buying, firming carcass value and discounted feedlot sales. Lean hog contracts are also staged for early strength, supported by residual buying and positive fundamental expectations.
Cattle: Steady-$2 HR Futures: 100-200 HR Live Equiv: $147.52 + .60*
Hogs: Steady-$1 HR Futures: 50-100 HR Lean Equiv: $ 81.24 – .29**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
GENERAL COMMENTS:
The cash cattle trade should start to take on better definition Thursday as short-bought and well-margined packers begin to kick tires more aggressively. Asking prices should be around $185 plus in the South and $115 plus in the South. If futures continue to work higher, feedlot resolve should naturally firm.
In that case, significant trade volume could easily be postponed until sometime Friday. The cattle board will open Thursday with expanded limits of 450 points. Live and feeder futures could open substantially higher thanks to residual buying, technical considerations and cash premiums.
