DTN Early Word Opening Livestock

 
Cattle: Steady Futures: $1 Lower Live Equiv: $133.81 -0.52* 
Hogs: Steady Futures: $1 Lower Lean Equiv: $ 84.21 +0.14**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Additional direction is expected in the cash cattle trade through the day Thursday. The development of limited activity in the North at $174 per cwt may be enough to get the ball rolling later in the week, but it may not be enough to totally set the market trend. Activity through the South remains undeveloped as active interest may be delayed until later Thursday or sometime Friday. Futures trade is expected to erode further as traders focus on the recent widespread tumble in outside markets. This lack of support is expected to weaken the entire complex over the near future.

Follow-through market pressure is expected following not only moderate-to-strong pressure through late-day trade Wednesday, but on concerns that additional market pressure will develop in outside markets through the end of the week. This could add even more market pressure to nearby lean hog futures. Even though there is expected to be an attempt to cover short positions early Thursday morning, the focus on generally lower outside markets may limit buyer support severely. Cash hog markets are expected steady with most bids steady to $1 per cwt lower. Total slaughter schedules for Thursday are expected to be around 468,000 head. Saturday runs are expected at 156,000 head.

	BULL SIDE		BEAR SIDE
1)	Cash cattle trade is expected to fully develop in the next couple of days with the potential that widespread losses in futures activity will be subdued when it comes time to cash prices.	1)	Sharp losses in stock market values leave most commodity markets searching for support. The Dow Jones Index fell 831 points Wednesday, casting a shadow on nearly all markets.
2)	Cattle futures continue to trade within the upper quarter of the short-term market trend following recent market support. This could limit further market weakness during late October.	2)	The inability for buyers to move back into the beef markets has allowed for moderate-to-firm pressure to develop across the complex. This could continue to develop over the near future based on widespread market softness.
3)	October live cattle futures continue to hold strong market support with prices expanding the price premium over December contracts, with a $13 per cwt premium now in place.	3)	Strong losses have quickly swept through lean hog trade once again. This is challenging the ability to sustain commercial support in the market, and may quickly cause additional liquidation to develop.
4)	Pork values continue to adjust higher based on expected firm product movement in the near future. Cutout values increased 14 cents per cwt with picnic, rib, and belly cuts each posting triple-digit support.	4)	Light-to-moderate pressure is expected to continue in cash hog values through the end of the week given the widespread market pressure. Underlying support may be hard to find given the general commodity market pressure seen through the week.

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

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