DTN Livestock Open: Hog Futures Likely to Bounce Higher

Lean hog contracts should open higher, supported by short-covering and impressive cash and product developments. Look for the cattle complex to open lower, checked by residual selling and lower feedlot sales.

Cattle: Lower Futures: 50-100 LR Live Equiv: $150.16 – .05*
Hogs: $1-2 HR Futures: 50-100 HR Lean Equiv: $ 79.32 + .69**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Cattle buyers were successful in generating light to moderate trade volume in Kansas and Nebraska by using sharply lower bids (i.e., $116 to $117). To be sure, many feedlots resisted such a severe price break. But packers may have purchased enough stock to at least put a cap on price potential for the week.

Time will tell, but it may take both higher cutouts and a meaningful board recovery for feedlot managers to win greater cash stability Wednesday or later this week. Live and feeder futures should open moderately lower, pressured by follow-through selling and negative cash potential.

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