DTN Early Word Livestock Comments 12/06 06:12
Feedlots Will Look for Higher Cash
Friday's trade was somewhat lackluster as there was little remaining for
traders to get excited about. There was a limited amount of cattle traded at
prices in line with earlier in the week. Hog cutouts are on a yoyo with traders
unable to guess each day what they will be, much less a trend.
DTN Contributing Analyst
Cattle: Higher Futures: Mixed Live Equiv: $204.50 +$1.09*
Hogs: Steady Futures: Mixed Lean Equiv: $88.13 -$6.77**
*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
December live cattle was the only contract which closed higher Friday. There
is anticipation for higher cash again this week, but traders may wait to see if
it materializes before adding further premium. Last week was a good week with
cash for both live and dressed $3.00 higher. One has to wonder just how much
longer this strength will continue before prices level out. Packers have been
aggressive as they needed to purchase cattle to maintain slaughter levels and
satisfy demand. Feedlots have been able to hold for higher prices and will look
to do the same this week. Higher boxed beef prices on Friday indicate demand
remains strong. Even though prices increased, they were substantially lower for
the week with choice losing $6.08 and select down $3.60. Strong packer margins
may still allow them to pay higher money to obtain needed cattle.
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