DTN Livestock Open: All Eyes on Trade Talks, Developing Storms

©Debra L Ferguson Stock Photography

Traders’ attention is expected to be split between the developing winter storm through the upper Midwest and trade talks slated to start in Washington, D.C., Thursday. Follow-through buying is likely during early trade.

Cattle: Steady to Higher Futures: Higher Live Equiv: $136.94 +0.14*
Hogs: Higher Futures: Mixed Lean Equiv: $ 80.74 -1.44**
* 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 remains quiet going into Thursday morning with initial bids in the South on Wednesday getting little interest at $105 per cwt. This is well below asking prices of $110 live in the South and $175 and higher dressed in the North. The direction of futures trade the next couple days will play a significant role in the ability for feeders to hold these elevated asking prices and potentially narrow the gap with higher cash cattle prices once the dust settles at the end of the week.

Given the attention on the trade talks and developing winter storm, cash trade may not develop until sometime Friday. A lot of attention is being placed on this active storm developing, which is expected to dump between 2 and 3 feet of snow on the Dakota’s before it is all said and done. This storm will have more of an impact on cow/calf operations, than cattle feedlots unless the storm path deviates to the south over the next day or two.

But this is also expected to create more transportation issues when related to market moves through the entire Midwest region than impact to overall animal production or health. The aggressive surge in feeder cattle futures created a technical market shift with nearby contracts breaking above September highs and closing at the highest live since May.

The underlying support based on longer-term supply tightness expected through the entire cattle complex, could gain additional legs through the upcoming days and weeks in order to take advantage of this bullish technical move. Live cattle futures continue to remain stuck near the ceiling of the long-lasting sideways trading range, with limited interest shown so far to break through resistance levels. Thursday slaughter runs are expected at 117,000 head.

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