DTN Early Word Opening Livestock

 
Cattle: Steady Futures: Mixed Live Equiv: $145.02 +0.09* 
Hogs: Steady to $1 Lower Futures: Lower Lean Equiv: $ 64.36 -1.67**
* 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 cash market trade is expected early Wednesday morning with additional uncertainty of follow-through moves through the end of the week. At this point, asking prices are still poorly defined, but may start to develop through the day. Bids are also not expected to be readily available until the second half of the week. The strong support in futures trade Tuesday is likely to keep most feedlot managerson the sidelinesthrough the end of the week. Most trade is likely to be delayed until Thursday or Friday. Futures trade is expected to remain sluggish at the opening bell with moderate-to-strong underlying support from Tuesday expected tocreate follow-through buying. A remnant of position-taking is also expected in the early minutes of trade, but the direction of the market through the rest of the day will be heavily influenced by outside market direction.

Sharp limit losses in all nearby lean hog futures trade Tuesday is setting the tone for additional market bearishness through the entire complex. Markets will open with expanded trade limits, allowing contracts to move $4.50 per cwt before becoming halted. The weaker technical and fundamental structure of the complex would point to additional softness, but with prices already under pressure, buyers may step into the oversold complex. Cash markets are expected to plug along in what has become a typical pattern with bids steady to $1 per cwt lower through the morning. The weakness in the entire complex should cause most bids to be steady to 50 cents lower as packers continue to keep plants full. Slaughter runs are expected at 445,000 head Wednesday. Saturday runs are expected at 156,000 head.

BULL SIDE	BEAR SIDE
Nearby live cattle futures have moved back to contract highs going into Wednesday trade. With April futures trading at $128.45 per cwt firm technical support remains.	Additional widespread snowstorms moving through the Midwest midweek is causing additional delays and concerns from both the packer and feedlot side of the market. This will not only delay cattle movements, but will also add to reduced gains.
Beef values continue to show significant improvement through the week, as wholesale price values are shifting higher despite the steady cash markets last week. This is helping to solidify additional underlying support through the entire market.	Market volatility and recent moves to contract highs in live cattle trade has led to a strong market retraction each of the last three weeks. This early-week shift higher could quickly allow for a moderate-to-strong pullback through the end of the week.
Continued concerns surrounding African swine fever in China and other Asian countries is still helping to instill long-term market support as traders feel that eventually, this will lead to additional pork movement into these high demand pork areas.	Limit losses Tuesday in all nearby lean hog contracts adds to the extreme bearishness of the market. There are concerns that traders will continue to liquidate positions based on overall uncertainty through the complex.
With trade talks with China the main international political event on the docket for the week, the pork industry closely watches any indication of specifics that would help to reopen trade to China at a more even price level.	Nearby contracts set contract lows Tuesday, breaking through long-term lows set last summer. The focus on aggressive plant processing levels and lackluster pork demand continues to add fundamental and technical weakness to the already bearish market.

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

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