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DTN Early Word Livestock Comments 08/04 06:24
Beef Packers Post Higher Bids
Cattle futures made a valiant effort to extend Friday's gains, but failed
into the close. Hog futures closed mixed, with spread trading putting pressure
on the nearby contracts. Traders were uncertain over continued demand.
Robin Schmahl
DTN Contributing Analyst
Cattle: Higher Futures: Higher Live Equiv: $268.00 +$2.27*
Hogs: Higher Futures: Higher Lean Equiv: $107.60 +$0.90**
*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 anticipation is for beef demand to improve seasonally. The question is
whether this is the time or if an increase in demand will be delayed, due in
part to the impact from the outside markets affecting consumer spending.
Packers are trying to improve their margins, but that has been a difficult
task. Slaughter continues to run below a year ago, but that alone has not been
sufficient to improve boxed beef prices. Choice boxed beef increased
significantly on Monday, gaining $5.35, but that is not much compared to the
recent losses. The strength will need to continue. Select boxed beef declined
$1.78, eliminating some of the gains on Friday. The initial indication is that
cash will be higher this week as packers are already bidding higher than last
week. No trade has developed as feedlots will seize the opportunity to obtain
higher prices for their cattle. The failure of cattle futures to hold gains
indicates traders are cautious and deciding to take profits after last week's
gains.
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