DTN Early Word Opening Livestock 01/21 08:46
Renewed Support Likely Following Long Market Weekend
Traders come back to the complex Tuesday morning following strong Monday
moves in beef and pork values as traders look to regain previous market
weakness although trade early Tuesday is still expected to remain sluggish.
By Rick Kment
Cattle: Steady Futures: Higher Live Equiv $144.13 +0.36*
Hogs: Steady Futures: Higher Lean Equiv $ 82.03 +1.64**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Limited direction is expected in cash cattle trade Tuesday as bids and
asking prices are likely to remain quiet through the first half of the week.
Even though Monday was a market holiday, packers were still open for business,
but the shorter week will likely spark some early week interest. Given cash
cattle trade at the end of last week ended generally steady to $1 per cwt
lower, most traders are likely looking at creating additional stability through
the month of January. Although market-available cattle are tightening
significantly, so are packer margins, which will limit the desire for many
cattle buyers to dig deeper into their pockets in order to fill buy orders.
This could lead to another end of the week standoff. Futures trade is expected
to open firm to moderately higher following the gains in boxed beef values
Monday. Select cuts rallied $0.73 per cwt, while choice cuts bounced $0.47 per
cwt higher early in the week. Even though live cattle prices pulled off of
recent highs the last two weeks, the market still remains well within the
sideways trading range near the top end of the market. This is creating some
potential firm support early Tuesday on which commercial buyers may step back
into the complex. Tuesday slaughter runs are expected near 121,000 head.
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