DTN Early Word Livestock Comments 12/07 06:22
Livestock Futures May Have a Difficult Recovery
The livestock complex was under substantial pressure Tuesday with markets
unable to find support. The level of ongoing demand is in question. Boxed beef
continued to decline. Hogs could not find buying support despite higher cash
DTN Contributing Analyst
Cattle: Steady Futures: Lower Live Equiv: $180.94 -$0.75*
Hogs: Steady Futures: Mixed Lean Equiv: $97.74 +$3.36**
*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.
The continued weakness of boxed beef has moved into the spotlight and is
driving much of the trade. Cash cattle have not yet traded for the week, but
expectations have been reduced to no better than steady with last week.
Feedlots in the South are asking higher prices while there have been no offers
posted in the North. The pressure stems from boxed beef prices. The price of
choice cuts has reached the lowest level this year. This may result in packers
reducing chain speeds, which will reduce their need for cattle. Boxed beef
Tuesday closed lower with choice down $0.66 and select down $1.97. Feeder
cattle felt the pressure of live cattle and could not find support even from
lower corn prices.