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DTN Early Word Livestock Comments 05/06 06:23
Price Resistance Remains Elusive
It was another banner day for cattle with new contract highs in all
contracts Monday. Tight supplies and higher boxed beef continue to provide
support. Hogs struggled throughout the day, closing with nearby months slower,
sand deferred months higher. Hogs are searching for support.
Robin Schmahl
DTN Contributing Analyst
Cattle: Steady Futures: Higher Live Equiv: $251.03 +$0.90*
Hogs: Higher Futures: Mixed Lean Equiv: $102.21 -$1.72**
*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:
There is no technical level of resistance as cattle futures continue to move
into uncharted territory. Resistance will come from consumers slowing beef
purchases due to high prices. There will be no influx of beef to the market
that will quickly increase the supply, and it will take time to rebuild the
beef herd. The increasing boxed beef prices are not improving packer margins as
they continually pay more to purchase cattle. All packers are accomplishing is
to keep up with demand. Boxed beef prices on Monday were higher, with choice up
$0.67 and select up $2.72. Cash cattle prices last week reached a new high for
the industry, with no indication of that changing anytime soon. Packers were
able to purchase some cattle ahead for deferred delivery last week, but that
may have limited influence on cash prices this week.
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