Written Commentary
MORNING LIVESTOCK OUTLOOK
It finally happened. Live Cattle broke support Tuesday. After last week’s light volume trading, volume was active Tuesday.
With a short kill this week and the beginning of the month packers have the upper hand buying cash cattle. They can pull from their own cattle and contract cattle first before buying from showlists. Feedlots naturally will be looking at the improving cutout and want and expect packer to pay up.
Packers aren’t able to fully utilize their plants when slaughter isn’t at or near capacity. It also means packers need to be and are more competitive for hogs on the cash market. Packers need hogs and it is evident on how packers are paying for cash hogs. The hogs that sell on the negotiated cash market are being priced more than $10 over formula hogs. This is unusual.
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