DTN Early Word Livestock Comments 12/08 08:23
Hogs are Ready for a Bounce
Only December live cattle and December lean hogs were able to eke out a
higher close. Live cattle futures traded in a relatively tight range. Traders
have again decided to wait for cash to trade before committing to a direction.
The uncertainty of cash and cutouts due to reporting problems left hog traders
on the defensive.
DTN Contributing Analyst
Cattle: Higher Futures: Mixed Live Equiv: $200.75 -2.68*
Hogs: Steady Futures: Mixed Lean Equiv: Unavailable**
*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 are trying to balance the significant weakness of boxed beef against
the strong potential for higher cash. Feedlots are looking for higher prices
again this week, posting offers at $3.00 higher. Yes, cattle supplies look like
they may tighten next year, but packers are dealing with the here and now.
Showlists are larger, which may leave packers less aggressive. However, demand
is strong and they will need to purchase for nearby processing needs as well as
for the next few weeks. Their resolve will be tested again. It is anticipated
cash business will develop Wednesday. Cutouts may be a drag on the market with
choice down $4.50 and select down $2.17 Tuesday.
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