DTN Early Word Opening Livestock

 
Cattle: Steady Futures: Lower Live Equiv: $144.02 -1.04* 
Hogs: Steady to $1 Lower Futures: Lower Lean Equiv: $ 72.59 +1.08**
* 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 trade has once again made it to Friday with no sense of direction or market activity. Packers are expected to be offering bids through the day, but don't expect early bids to be anything to gain the attention of feeders. The sharp pullback in futures trade Thursday may be what packers need to shake loose cattle from higher asking prices. It is likely that trade will not develop until well into the day. Futures are expected to start lower, as traders enter the market Friday. With a new month on the books, the focus on short-covering is expected to get the attention of most traders. Some additional buyer support is likely to move into the market ahead of the weekend, leaving prices generally unsettled through most of the session.

Cash hog prices are steady to $1 per cwt lower with most bids steady to Friday. The strong pressure in futures trade is expected to add even more uncertainty to the overall cash complex at the end of the week. Even with traders moving into a new month, the expectation is that active trade may not develop until early next week. Futures trade turned sharply lower Thursday, which is expected to continue the market weakness through the complex Friday. With April futures holding on the $60 per cwt price level for the time being, there seems to be little to no significant support likely in the near future. Traders may try to cover short positions through the end of the week with the attention on all nearby contracts and growing concerns of pork demand through the rest of the year. Slaughter runs at the plant are expected at 465,000 head Thursday. With Saturday runs at 310,000 head.

BULL SIDE	BEAR SIDE
1) Packers continue to go into the end of the week short-bought as they move into the month of February. This is expected to create buyer support Friday and allow for potentially stable cash market prices even following aggressive futures pressure.	1) Sharp triple-digit losses flooded cattle markets, moving April futures $3.17 per cwt under session highs. The aggressive pressure at the end of January quickly eroded market support, creating questions of further strength.
2)Nearby April live cattle futures continues to trade above initial support levels from last week. The aggressive market shift the last week has created volatility in the market, even though prices remain near contract highs.	2)The one-day, triple-digit tumble in live cattle futures shifted the monthly continuous chart from a strong market gains. This close caused spot-month contracts to remain stable with December, marking the first decline in six months.
3)Limited pressure in deferred lean hog trade has allowed for traders to take a more stable approach to pork supply and demand through the second half of the year. This could establish long-term market support moving back into the complex.	3) April futures led lean hog futures sharply lower, adding to the already bearish market tone in January.
4) Firm gains quickly redeveloped in pork cutout values Thursday, eroding recent market support and showing encouraging market support in primal cuts, which is essential to sustain growing pork demand through the next couple of months.	4) Cash hog values continue to struggle to gain market significance with packers still struggling with lower plant production due to the recent weather conditions and cold temperatures keeping much of the nation hostage.

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

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