DTN Early Word Opening Livestock

 
Cattle: Steady Futures: Mixed Live Equiv: $136.09 -0.78* 
Hogs: $1 Higher Futures: $1 Lower Lean Equiv: $ 82.57 +1.55**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Limited cash market activity is expected through the day Wednesday, although packers should step into the market at some point with token bids at least. Initial bids should be near $107 live basis and $168 dressed, although at this point, these numbers are not expected to gain any attention from feedlot managers. Asking prices are likely to become more evident with prices seen near $114 live and $176 and higher dressed. But most trade may be delayed until Friday, potentially after the release of the Cattle on Feed report. Futures trade is expected to remain mixed with sluggish market interest. This may spark some additional market activity, but traders seem to be increasingly cautious to move above recent market support, and content to hold prices within a narrow trading range and still hang onto the underlying firm market trend from last week.

Follow-through support is expected in early hog bids with trade likely to be steady to $2 per cwt higher Wednesday morning. Most bids are expected to be $1 per cwt higher as overall underlying support from recent market shifts and the aggressive turn higher in futures trade may help to motivate hog buying activity. As cleanup efforts continue in North Carolina, plants are expected to become steadily more productive through the end of the week. Not only do processors have to deal with flooding issues in plant areas, but the ability to get hogs and plant staff to the facilities due to flooding issues may be the biggest obstacle in the near future. Futures trade is expected mixed early Wednesday with a combination of follow-through support, while some traders look for positioning opportunities.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures continue to at the top end of the short-term market range with recent buyer support adding additional underlying market support and firming trade activity.	1)	Lack of cash market interest shown by either packers or feedlot managers continues delay any cash market support. With active trade likely to be pushed off until the end of the week.
2)	Additional strong market activity is expected to continue to move into December live cattle futures with traders focusing on a manageable supply of beef through the end of the year while overall domestic demand is expected to remain firm.	2)	Lack of follow-through support in live cattle and feeder cattle futures following the aggressive shift higher across the hog complex is creating some underlying apathy through the market. This may limit the upside of the market through the rest of the week.
3)	Sharp market rallies in cash hog values Tuesday are expected to add even more underlying support to the recent gains in the complex.	3)	Despite the strong underlying support in nearby lean hog futures, the October to June price spread remains extremely wide. June futures continue to hover between $80 and $81 per cwt, putting additional focus on long-term market shifts and less emphasis on nearby trade activity.
4)	October lean hog futures have quickly pushed through short-term resistance levels of $58.60 per cwt. This may spark some additional underlying commercial support through the next couple of weeks.	4)	Limited follow-through support is likely early Wednesday morning as lean hog trade may turned into a mixed shift as traders try to adjust positions following the sharp market rally Tuesday.

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

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