DTN Early Word Opening Livestock

 
Cattle: Steady Futures: Higher Live Equiv: $146.05 +0.62* 
Hogs: Steady to $1 Lower Futures: Lower Lean Equiv: $ 65.37 +1.91**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Sluggish trade is expected early Tuesday morning following lackluster and directionless moves in all cattle trade Monday. Sharp early-week losses in corn, wheat and lean hog trade have diverted the focus away from fundamental and technical moves that may develop in the cattle complex, keeping prices hovering in a narrow range. The direction Tuesday is not expected to change as traders continue to focus on outside market direction while assessing end-of-month demand for beef. Cash markets are undeveloped with bids and asking prices still quiet. This is expected to continue through the next couple of days with active trade likely to be pushed off until late in the week.

Packers will attempt to get back to normal as many areas spent the weekend and part of the day Monday cleaning up from the latest round of snow and winter weather, yettransportation in some areas will still be a challenge, which will limit overall movement of hogs to plants. Cash bids are still expected steady to $1 per cwt lower with regional market situations likely to keep bids scattered through the range. Futures are expected to continue to move lower following concerns of pressure in cash markets and lack of stability in wholesale pork values. This may add even more uncertainty to the entire complex as traders could once again test last-week lows. Slaughter runs are expected at 475,000 head Tuesday.

	BULL SIDE		BEAR SIDE
1)	Strong early-week gains in boxed beef values has sparked increased underlying support through the entire beef complex.	1)	Severe winter weather and mounting snow amounts in many areas of Northern cattle country is limiting gains and cattle health through the last couple of months. This is expected to increase costs of gains of most cattle, also delaying finishing cattle by as much as weeks in some areas.
2)	Packers appear to remain short-bought going into the week. This would likely leave packers with limited cattle sourced through the first week in March, adding the potential for increased cash values as the week continues.	2)	The inability for packers to buy additional cattle on the cash market has created pressure to reduce overall plant runs. This may continue to reduce overall packer needs through the end of the month, avoiding higher cash market prices.
3)	Triple-digit gains developed in pork cutout values Monday,signaling that demand may be picking up as 2019 progresses.	3)	Volatile shifts in wholesale pork prices hascreated market uncertainty in the complex. The trend of variable wide up and down markets is eroding the confidence that primal cuts are gaining demand through the end of February.
4)	Hope continues to develop that any trade deal with China would secure significant short- and long-term pork purchases. This market momentum will likely randomly gain traders attention through the next couple of weeks.	4)	Sharp triple-digit losses have flooded through the entire lean hog complex Monday. This created additional concern that follow-through liquidation will develop as the week continues. This may push through recent support levels, setting contract lows before the end of the month.

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

(BAS)

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