Cattle futures held up well despite the bearishness of the Cattle on Feed report. Much of it seems to have been factored in with traders now looking toward cash. Hog futures were split with closer months higher and later months lower. Likely positioning ahead of the report Thursday.
Cattle: Lower. Futures: Mixed. Live Equiv: $197.84 +$1.49*
Hogs: Steady. Futures: Mixed. Lean Equiv: $114.95 -$2.49**
*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.
Even though the cattle complex held well Monday, it will be difficult to shake the overall bearishness of the Cattle of Feed report. Feedlots may have a difficult time prying more cash out of packers, even if they hold out for much of the week.
Boxed beef prices were higher with choice up $1.23 and select up $4.18, but even with that, packers have some cattle already forward contracted, and they know that cattle will need to come to the market. Beef production is estimated to decline in the second quarter compared to the first quarter, but the way the market is shaping up, they may not be the case.
The trade is not reflecting that due to the discount of June as well as August live cattle futures. The Commitment of Traders report showed funds as net buyers of 1,734 contracts bringing their net long positions to 41,878.