Cattle finally bounced after the brutal selloff and even in the face of stronger grain prices. That may continue today as corn futures are under pressure overnight. Hog futures just could not hold the strength it had during the day finally succumbing to more aggressive selling despite higher cash.
Cattle: Lower. Futures: Higher. Live Equiv: $192.62 +$0.57*
Hogs: Steady. Futures: Mixed. Lean Equiv: $114.15 +$2.66**
*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.
Cattle futures just could not help themselves as the oversold market needed a bounce. Traders decided it was time to cover their short positions after futures declined around $10.00 over the past month. This decline took place even though cattle supplies are expected to tighten. Escalating feed prices had an influence on the market as well as the indication from boxed beef that consumers were backing away from higher end cuts of beef.
It is likely cash will not trade higher this week based on the trend set last week and significantly lower boxed beef prices over the past month. Boxed beef did bounce Monday with choice up $0.38 and select up $1.81 but traders will be cautious whether boxed beef has found a bottom. The Commitment of Traders report showed funds as net sellers of 25,281 contracts in live cattle reducing their net longs to 60,152 contracts.