DTN Early Word Livestock Comments 08/05 06:17
Export Sales May Set Direction
Cattle and hogs diverged Wednesday. Live cattle futures found support from
higher cash and continued higher boxed beef prices. Feeder cattle found some
support from a lower corn price. Hogs fell apart later in the day as cutouts
posted substantial losses.
Robin Schmahl
DTN Contributing Analyst
Cattle: Higher Futures: Higher Live Equiv: $214.70 +2.58*
Hogs: Steady Futures: Mixed Lean Equiv: $129.80 -4.68**
* 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
GENERAL COMMENTS:
Live cattle futures extended their gains Wednesday with prices knocking on
the door of making new contract highs. Steady weights and the potential for
tighter supplies later in the year is supporting the market. The rise of boxed
beef indicates strong demand. Choice cuts jumped $3.50 with select cuts
increasing $3.66. Packers had to bid up to obtain cattle with cash generally
trading $1.00 higher throughout the country. Feedlots are asking higher prices,
but with trade developing Wednesday, it may be difficult to pry more out of
packers unless they need to be more aggressive in obtaining supply Thursday or
Friday. If futures move to new highs, traders may increase their buying as the
trend may be turning up.
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