DTN Early Word Livestock Comments 03/03 06:10
Livestock Futures May Find Little Direction
Cattle futures ceased their liquidation and closed higher. The market may
have been overdone to the downside as boxed beef prices are climbing, and
futures hold a discount to cash. Hogs closed mixed with uncertainty over the
potential to move higher without cash and cutouts showing consistency.
Robin Schmahl
DTN Contributing Analyst
Cattle: Steady Futures: Higher Live Equiv: $280.65 +$1.66*
Hogs: Higher Futures: Higher Lean Equiv: $104.28 +$0.73**
*Based on the formula estimating live cattle equivalent of gross packer
revenue. (The Live Cattle Equiv. The 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.
GENERAL COMMENTS:
Cattle futures ran out of aggressive selling on Monday after contracts
gapped lower on the open. The liquidation ran its course with short-covering
and new buying interest taking place. There remains uncertainty in the market,
but traders have digested some of it and are focusing more on the fundamentals.
The news surrounding the potential JBS strike has been quiet. The lower cash
cattle trade last week casts a little cloud over the market with early thoughts
that cash may be no better than steady this week. Packers continue to reduce
the slaughter pace in an attempt to back up cattle and bolster boxed beef
prices. Boxed beef prices were higher on Monday, with choice up $1.50 and
select up $3.90.
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