DTN Early Word Opening Livestock

 
Cattle: Steady Futures: Firm Live Equiv: $135.61 +0.76* 
Hogs: $1 Higher Futures: Mixed Lean Equiv: $ 86.02 +0.97**
* 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 interest is still expected in cash cattle markets through the day Tuesday with packer interest quiet early in the day, but could slowly develop with a few starter bids. No significant market development is expected until midweek or after in cash cattle markets as feedlot managers are likely to keep asking prices elevated well into late week, although at this point, asking prices have not yet been established. There may be some additional focus on the direction of futures trade. Outside markets will play a larger role in the movement of live cattle trade, with the generally bullish trend continuing through the week, although the potential of a market correction could limit any upside market shifts Tuesday.

Cash hog values are expected to remain mostly higher with the majority of bids expected to be 50 cents higher. The full range of activity early Tuesday is expected to be $1 lower to $1 per cwt higher, as packers try to adjust with the recent market support over the last couple of weeks. This market shift higher is not sustainable, although the underlying tone in the market remains firm, likely limiting the downside of the market through most of October. Lean hog futures are expected to remain mostly higher, although even though there is a strong indication that follow-through buying will develop, the light volume may open the door for market positioning through the morning, allowing for mixed trade to potentially lead the market in a wide market price range.

	BULL SIDE		BEAR SIDE
1)	Firm buyer support in boxed beef values is helping to sustain additional fundamental support through the complex during early October.	1)	Cash cattle markets have shown limited support over the last couple of weeks, causing some to fear that the market may remain stuck in a narrow and sideways trading range during much of the fall.
2)	December live cattle futures broke through resistance levels Monday, creating the opportunity to spark some additional underlying support through the entire complex. This may allow for cattle trade to plan a more steady and focused shift higher, rather than the erratic triple-digit gains seen in hog futures.	2)	The inability to for live cattle futures to show anything other than limited market support Monday while nearly all other markets surged higher, is creating some larger market concerns about sustaining long-term buying interest through the entire complex.
3)	Triple-digit gains in each of the last two trading sessions has caused some major market shifts through the complex. This is opening an opportunity for additional strong buyer interest to move into both nearby and deferred contracts.	3)	Cash hog values slipped Monday afternoon, allowing for a turn from the recent widespread buyer support in the last couple of weeks. This could start to curb overall fundamental support through the entire complex.
4)	Firming pork values through the last week is expected to spark some additional focus on the ability to bring additional support to the complex early in the month of October.	4)	The wide price moves higher in the last two sessions is expected to create increased volatility through the lean hog market with a market correction likely to develop in the near future. This could allow for prices to yo-yo back and forth in the coming days, adding uncertainty to the entire market.

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

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