DTN Early Word Livestock Comments 09/21 06:20
Cattle Traders Anticipate Higher Cash
Traders were impatient Wednesday and did not want to wait around for cash
sales to buy into the market. Buying pushed futures higher in the anticipation
of at least $1.00 higher cash. Hog futures broke through price resistance as
packers became more aggressive Wednesday.
DTN Contributing Analyst
Cattle: Higher Futures: Mixed Live Equiv: $221.48 -$1.08*
Hogs: Lower Futures: Mixed Lean Equiv: $106.33 -$1.91**
*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 want to wait to see confirmation of cash trade before buying
aggressively in the market. It followed a similar pattern to last week when
futures pushed higher in anticipation of higher cash, which then took place.
Tighter cattle supplies are the driving factor with limited influence from
boxed beef prices. Boxed beef prices are very good, but the recent weakness has
had no real impact on the overall market. Wednesday, boxed beef was lower with
choice down $0.86 and select down $3.10. Some cash trade might develop
Thursday, but more likely it will wait until Friday, as has been the pattern
the past number of weeks. The upcoming Cattle on Feed report may have some
influence on futures Thursday, keeping contracts from making new highs.
Estimates for the report are for on-feed numbers as of Sept. 1 at 97.6% of a
year ago. Placements in August are estimated at 93.6% with marketings at 94.4%.
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