DTN Early Word Opening Livestock

 
Cattle: Steady Futures: Higher Live Equiv: $145.89 -0.16* 
Hogs: Steady to $1 Lower Futures: Higher Lean Equiv: $ 65.41 +0.04**
* 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 business continues to focus on limited trade direction with bids still undeveloped. Although asking prices are starting to become more available as the week continues, this may still not spark trade until late in the week. Even though packers remain short-bought, the lack of interest is likely to limit additional direction Wednesday, although a few bids may slowly develop. Futures trade is expected to continue to show market firmness, although with April contracts bumping up against the $130 per cwt level, there may be some resistance levels to move above these prices through the end of the month. If prices can hold contract highs through the end of the month, this would be a significant boost, potentially sparking even more activity through the upcoming weeks.

With packer runs expected to move back to regular, full speeds through the end of the week, the job to continue to pick up additional market-ready hogs will likely be a simple task. Bids are expected to once again develop from steady to $1 per cwt lower, although most bids are likely to be 50 cents lower through most of the morning. Futures trade is expected to remain higher, although moderate position-taking is expected to move back into the market following the strong Tuesday gains. Even though the complex still remains weak, and near support levels, the potential to bring buyers back into the market through the end of the week could help spark buyer activity during the Wednesday session.

	BULL SIDE		BEAR SIDE
1)	Nearby contracts continue to set contract highs with April futures testing $130 per cwt resistance levels. Moves above this level could spark additional buyer activity through the entire complex.	1)	Continued cold weather is still blanketing most of cattle country, creating feeding challenges and limiting overall gains and efficiency. Weather premiums have not been fully working through price support the last several weeks, allowing significant production costs for feeders.
2)	Feedlot managers continue to focus on firming futures trade and recent beef value gains in the wholesale market. This has elevated asking prices. It is likely that feeders will not back away from these prices until late in the week, even then, they may decide not to fold, leaving limited trade once again this week.	2)	Select boxed beef cuts posted firm pressure Tuesday, creating underlying concerns that follow-through meat price support may be starting to erode through the end of the month.
3)	Strong gains in lean hog futures Tuesday has sparked renewed life through the hog complex, with prices bouncing over $3 per cwt over early-week lows. This shift higher, may be able to spark some additional long-term buyer support through the entire market.	3)	Sharp cash hog losses developed Tuesday with prices falling $1 per cwt in the afternoon cash sales report. Extremely active trade developed Tuesday, with sales nearly double levels typical seen in daily trade.
4)	Even though there are no new details in U.S.-China trade talks, the expectation that something will get done and it will have a positive impact on the pork market, is helping to give the market a sense of hope for long-term stability.	4)	The tone of the lean hog complex remains weak with prices still near support levels, and traders are uncertain if a one-day bounce is enough to spark consistent change through the entire complex.

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

(BAS)

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