DTN Early Word Opening Livestock

 
Cattle: Steady Futures: $1 Higher Live Equiv $140.90 +0.75* 
Hogs: Steady to $1 Lower Futures: Mixed Lean Equiv $ 82.13 -0.53**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Cash cattle trade activity has been undeveloped so far this week, but with packers and feeders entering the home stretch once again, the expectation is that swift and quick trade will develop late in the day. Packers and feeders continue to remain well rooted in their positions through the week, limiting additional expectations of a significant shift in direction, in activity or price levels. Futures trade is expected to open higher once again, although the potential for moderate position-taking is increasing due to the active support in the complex over the last several weeks.

Cash hog values are expected to remain weak once again early Friday morning as moderate processing reductions are likely through the end of the week due to a couple of normal running plants going dark either Friday or Saturday. This is expected to be a signal of overall market tightness in the industry. At the same time, margins have eroded over recent weeks, and plants are less aggressive in moving hogs through the system. Futures are expected to remain mixed in a narrow-to-moderate trading range in the early minutes of trade. The pullback in trade Thursday once again indicates that markets may continue to hold the choppy price pattern over the near future. Processor schedules are expected at 455,000 head Friday. Saturday runs are expected at 82,000 head.

	BULL SIDE		BEAR SIDE
1)	The strong buyer support in the complex has drawn additional interest back into the market. This latest move in nearby contracts has pushed April live cattle futures through the Nov. 29 resistance levels. If these price levels hold, it could spark additional buying, with markets testing 2017 highs.	1)	Cash cattle trade has still been undeveloped through the week with no indication that the active moves in futures trade will be able to significantly increase cash markets at this point.
2)	Strong late-week support is quickly moving through the boxed beef complex, which is not only helping to drive futures markets higher but is creating some underlying fundamental support that is likely to be carried into the rest of the spring.	2)	Lack of stability in the boxed beef values have allowed markets to shift higher and lower in a moderate range over the past week. This is creating even more market uncertainty as traders look for increased seasonal support in the coming weeks.
3)	Pork cutout values have remained moderate over the last couple of weeks following aggressive pressure early in February. This may add even more uncertainty to the complex as traders look for any potential of bullish market news.	3)	Moderate to strong losses Thursday in futures trade has once again brought traders to the realization that increased widespread pressure may continue to quickly develop despite previous gains. The back and forth shifts in the market will likely add even more volatility to the entire hog complex.
4)	Lean hog futures continue to trade well above recent long-term support levels seen over the last couple of weeks. The potential to create a strong market base at these prices could spark widespread longer-term buying activity.	4)	Cash hog trade has continued to weaken even though packers are cutting back on processing speeds at the end of the week. This decision to limit packer spending is focused on eroding pork margins over the last few weeks and concern that additional cuts will be seen in the near future.

Rick Kment can be reached at rick.kment@dtn.com

(BAS)

Copyright 2018 DTN/The Progressive Farmer. All rights reserved.