DTN Livestock Open: Early Spillover Weakness Expected

Texas A&M AgriLife Extension Service photo by Adam Russell

Sharp lean hog losses Friday will weaken market direction early Monday morning, although a combination of short-covering and follow-through selling is expected.

Cattle: Lower Futures: Mixed Live Equiv: $153.27 +1.63*
Hogs: Lower Futures: Lower Lean Equiv: $ 91.12 -1.97**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Given the continued bearish market direction in cattle trade, cash cattle interest is expected to remain at a standstill through the first couple of days this week. Showlist distribution and inventory taking is likely to be the extent of any cash market information seen during the week. Now that we have a complete week in the books following the Tyson plant fire, it will be interesting to monitor and watch daily slaughter numbers.

I would expect that overall numbers would be steady to higher than last week’s levels, which may eliminate some of the overall pressure from causal market watchers and some noncommercial traders. Especially since “year-ago slaughter numbers” give us a less complete picture due to the overall changes in market structure over the last year.

Firm pressure last week has caused live cattle and feeder cattle to remain generally oversold. This is expected to spark additional potential for moderate-to-firm gains through the week, although the renewed bearishness in hog trade is likely to limit upward movement.

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