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DTN Early Word Livestock Comments 02/20 06:06
Traders Cautious Ahead of Cash and the Cattle on Feed Report
Live cattle futures were mixed with traders anticipating higher cash trade
but were not willing to support deferred contracts, as continued strong beef
demand is uncertain. Hog futures continue to regain the losses of last week in
contracts through the rest of the year and later contracts slipped.
Robin Schmahl
DTN Contributing Analyst
Cattle: Higher Futures: Mixed Live Equiv: $268.45 +$0.51*
Hogs: Lower Futures: Higher Lean Equiv: $102.06 +$0.72**
*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:
Traders had no direction from cash to determine the strength or weakness of
futures. This resulted in mixed trade with nearby contacts, anticipating higher
cash prices. However, the lack of definite movement in live cattle and lower
prices for feeder cattle might have been influenced by the upcoming Cattle on
Feed report to be released after the close today. The trade estimates cattle on
feed on Feb. 1 at 98.5% of a year ago, with estimates ranging from 97.8% to
98.8%. Placements in January are estimated at 96.7% with a range of 92.7% to
99.5%. Marketings are estimated at 87.0% with a range of estimates from 86.7%
to 88.0%. Despite traders remaining cautious ahead of the report, a bearish
report may be short-lived as market fundamentals will override any bearish
numbers. There would be an immediate reaction, but prices will correct to align
with current fundamentals. Boxed beef prices were mixed again, with choice up
$1.37 and select down $0.84.
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