DTN Early Word Livestock Comments 02/12 06:16
Dry Weather Causes Concern in Cattle Country
Cattle futures found good buying interest on Wednesday, but it was not
enough to move prices above the recent trading range. However, it does increase
the potential for higher cash. Hogs did not run out of liquidation pressure as
futures continued to correct their overbought technical status.
Robin Schmahl
DTN Contributing Analyst
Cattle: Higher Futures: Mixed Live Equiv: $269.34 -$0.78*
Hogs: Higher Futures: Mixed Lean Equiv: $99.55 -$1.69**
*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:
The April live cattle contract fell just shy of closing the chart gap that
remained since Feb. 4. The other live and feeder cattle contracts remained
within the recent sideways range. The gains should result in greater potential
for higher cash trade this week. The dryness developing in cattle country is an
increasing cause for concern. There is discussion and some movement of cattle
weighing as low as 300 pounds moving into feedlots due to the dryness. That
certainly does not increase the desire or the ability to rebuild the cow herd.
The current market fundamentals suggest that the increased importation of beef
from Argentina will have little impact on beef prices. Boxed beef prices were
lower, with choice down $1.63 and select down $0.32.
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