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DTN Early Word Livestock Comments 05/08 06:15
Traders Wait For Further Cash Sales
Cattle futures took a breather Wednesday as traders want to see cash trade
develop before further committing to supporting the market. Hog traders were
uncertain of a price direction with a mixed close. Cash and cutouts did not
provide support.
Robin Schmahl
DTN Contributing Analyst
Cattle: Higher Futures: Mixed Live Equiv: $253.56 +$0.95*
Hogs: Lower Futures: Mixed Lean Equiv: $101.09 -$0.16**
*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:
No further cash cattle trade took place on Wednesday, leaving traders
unwilling to push nearby futures higher. However, the December and later live
cattle contracts made new highs before slipping back. Price optimism remains,
but increased caution is developing due to the record-high prices. Cattle
prices will not fall back due to an increase in cattle supplies anytime soon.
Prices will fall back when demand slows. Consumers will not continue to pay
higher beef prices indefinitely, but will reduce consumption. So far, there has
been no evidence of this, as boxed beef prices remain strong with choice up
$1.48 and select up $1.03 on Wednesday. Feeder cattle are in strong demand as
auction prices continue to increase weekly.
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