Live cattle futures were mixed Friday as traders coasted into the close in anticipation of the Cattle on Feed report. The report was bearish, indicating a strong potential for futures to open lower. Hogs and another banner day with cash and cutouts higher. New contract highs were posted in May and later contracts.
Cattle: Lower Futures: Lower Live Equiv: $196.35 +$0.02*
Hogs: Steady Futures: Mixed Lean Equiv: $117.44 +$1.92**
*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
Traders did not have much more to provide market direction after cash was set for the week at mostly steady prices. Some dressed cattle in the North traded $1.00 lower, leaving the market lethargic. The attention was turned to the Cattle on Feed report due out after the close Friday with traders somewhat content with their positions, leaving futures mixed for live cattle.
Feeders drifted lower with a rise of grain prices. Cattle on feed numbers came in about as expected at 101% compared to the average estimate of 101.1%. However, placements were the real kicker with the actual number at 109% compared to the estimate of 106.5%. This indicates more cattle will be available to move through the system, delaying the anticipated tighter supplies as the year progresses.
Supplies are expected to tighten but not it will take longer than anticipated. Packers will take advantage of these numbers and limit what they will be willing to pay for cattle. Marketings were a bit more of a bright spot at 105% compared to the average estimate of 104.2%. Futures are expected to open lower.