DTN Early Word Opening Livestock

 
Cattle: Steady Futures: Higher Live Equiv: $149.67 +0.16* 
Hogs: $1 Higher Futures: Higher Lean Equiv: $ 69.53 +0.87** 
* 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 traded generally steady at $128 live and $205 dressed last week, which will carry over into this week. Packers see no need to bid higher to begin the week even though futures put in a strong close at the end of the week. The Cattle on Feed report was considered neutral with on-feed and marketed numbers right in line with the average estimates. USDA reported placements at 95% compared to the average estimate of 92.6%. However, this was within the range of estimates. The fact that both feeders and live cattle posted a strong close should keep bulls in control and support under the market. Offers in the country may start out same as last week at $130 live and $207 dressed with packers beginning where business took place last week. Commitment of traders report shows funds are long 180,903 futures contracts and short 44,907 futures contracts. Commercial traders are long 130,603 futures and short 236,347 futures.

Hogs put in an impressive end to the week. Thursday's sentiment was quickly put to rest with contracts breaking above technical resistance. This should generate further buying interest and force some short-covering. Pork cutouts were strong up $1.19 and bellies up $2.65. The combination of bullish technicals and friendly cash may generate a solid trend higher. The Commitment of Traders report showed funds long at 80,776 futures contracts and short 86,443 futures contracts. Commercial traders are long 92,493 futures and short 78,241 futures.

	BULL SIDE		BEAR SIDE
1)	A strong close for both live and feeder cattle futures keeps the friendliness of the market intact. Follow-through buying should surface.	1)	The Cattle on Feed report was considered neutral for the most part except for higher placements than analysts expected.
2)	April, May, and August feeder cattle closed at the highest level since November opening the way to further buying interest. June, August, October, and December live cattle futures closed at new contract highs.	2)	The combination of cattle trade no more than steady last week and the Cattle on Feed report numbers now being known could turn traders more bearish.
3)	Spillover support from cattle futures and a strong close on Friday should carry through Monday.	3)	Hog futures may have rallied in sympathy with a strong cattle complex. There is potential that futures may fall back into the sideways range they had been in.
4)	Packers should be interested in accomplishing business this week at higher prices due to strong pork cutouts at the end of last week.	4)	No further progress is being made on the U.S.-China tariff situation may keep pressure on the market despite continued reports of African swine fever. The market will need proof of increased export business.

Robin Schmahl can be reached at rschmahl@agdairy.com

(BAS)

Copyright 2019 DTN/The Progressive Farmer. All rights reserved.