DTN Early Word Opening Livestock

 
Cattle: Steady Futures: Mixed Live Equiv:$136.34 -0.82* 
Hogs: $1 Higher Futures: Mixed Lean Equiv:$ 75.81 +1.62**
* 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 remains essentially undeveloped going into Friday morning. The standoff between limited bids the last few days and feedlot managers that are unwilling to part with cattle at lower prices is setting the stage for what could be a late day of trade. Light-to-moderate trade is expected to develop sometime Friday in all areas, although overall market interest may remain sluggish. Futures trade is expected to remain mixed in a narrow direction early Friday with most of the focus on outside market factors. Traders in all markets will be spending more time gaining information on Hurricane Florence and the impact on the East Coast. This will likely keep overall market activity light through most of the session.

Futures trade is expected to remain sluggish through most of the session Friday. News stories and developments on the impact of Hurricane Florence continues to gain more attention at this point than any other market factor. This will likely keep most traders focused on other issues, which could keep overall trade direction stable. The uncertainty as to how this will impact the hog industry in and around North Carolina as well as pork processors will have a big impact on the overall movement of hog trade through the next few days. But for most of the Friday trading session, it is likely to be too early to tell just what impact this will have short and long term. Even though the hurricane has been downgraded to a Category 1 storm, it still is expected to cause major disruptions through the areas. Cash hog values are expected to shift higher with increased support at the end of the week.

	BULL SIDE		BEAR SIDE
1)	Futures trade has sparked firm underlying support in early 2019 contract months with February through June futures holding a firm market premium over spot-month contracts. This indicates growing demand support expected as traders also focus on the potential to tighten supply levels.	1)	Live cattle futures pressured lower Thursday, limiting the potential to break-through August resistance levels of $112 per cwt. This threw the cattle complex back into the sideways market trend through the entire summer with the potential that prices may hover in this range over the near future.
2)	Beef exports continue to improve, with weekly export shipments 15,700 metric tons ahead of the previous week. This continues to focus on active movement of beef through early fall months.	2)	The inability to spark active cash cattle trade until late in the week has caused some additional concerns through the entire market. This may lead to increased overall pressure late Friday.
3)	Active buying in February lean hog futures continues to focus on expected strong demand through early 2019.	3)	Hurricane Florence is expected to keep pork plants on the eastern seaboard dark Friday and likely through the end of the week. This has the potential to limit pork totals through the month of September, depending on any long-term delays.
4)	Strong buyer support in cash hog values continues to drive underlying buyer support through the complex. The most impacted is December and February futures, which gained additional support Thursday.	4)	Total weekly exports remained unchanged with the week previous, which is limiting overall pork product movements.

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

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