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DTN Early Word Opening Livestock       01/18 05:52

   Late-Week Positioning 

   Market weakness through the end of the week is creating additional market 
pressure in cattle and hog futures. This could allow for moderate price shifts 
as traders adjust positions ahead of the long holiday weekend.

By Rick Kment
DTN Analyst

Cattle: Steady               Futures: Lower   Live Equiv: $141.58 +0.31* 
Hogs:   Steady to $1 Lower   Futures: Mixed   Lean Equiv: $ 74.68 +0.46**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue


   Cash cattle business has once again made it to Friday without any 
significant market direction, or indication that packers and feeders will make 
an effort to come to terms on selling cattle for the week. Packer interest 
should improve through the morning, although it could be late in the day before 
there is trade. Asking prices will likely be at $123 and higher live and $200 
to $203 dressed, although given the market volatility in all livestock trade, 
it is uncertain where markets will shake out by the end of the day. Futures 
trade is expected to open with a weak undertone following previous sharp losses 
in feeder cattle, creating market uncertainty through the entire market. 
Traders are likely to try to square positions Friday, as overall volume may 
remain sluggish ahead of the three-day weekend.

   Early lean hog trade is expected to remain mixed in a moderate range as 
limited trade volume is likely to develop in the next few hours. Traders 
continue to focus on outside market direction as well as growing concerns about 
pork movement through the summer months as softness is likely to redevelop in 
all spring and summer contract months. Cash hog prices are expected to be 
steady to $1 per cwt lower, although the majority of trade is likely to remain 
steady early Friday morning. This could add even more softness to the entire 
complex as traders try to focus on upcoming procurement levels, although the 
expected winter storm moving through late in the day and through the weekend 
may limit overall activity Saturday and potentially into next week. With 
markets closed Monday due to Martin Luther King Jr. Day, it is likely that 
additional late-week activity may develop. 

BULL SIDE                             BEAR SIDE
1) Firm late-week support is          1) Feeder cattle futures swiftly tumbled
returning to beef values, as boxed    lower, falling well below support levels
beef prices bounced higher Thursday,  late last fall. This may spark additional
allowing for increased focus on       uncertainty through the complex.
positive product movement and
potentially higher cash values to
2) Live cattle futures continue to    2) With markets closed Monday, traders
trade at the top end of the price     are going into the weekend trying to make
range following a moderate pullback   adjustments to positions following very
in prices Thursday. This could help   volatile market swings. This lack of
to focus increased buyer support      direction could add even more uncertainty
through the complex in the next few   to all markets.
3) Packers will continue to work hard 3) April lean hog futures have continued
to gain access to market-ready hogs   to weaken, with prices maintaining price
in order to keep plants full based on levels well below November support
the still strong packer margins. This levels. The next major support level
will likely minimize cash price       remains near, $61 per cwt set last
levels in the next couple of weeks.   August, still $3.50 per cwt below current
4)Firm gains developed in pork values 4) The winter storm moving through the
as picnic and ham values shifted      country through the weekend, as well as
sharply higher Thursday. This offset  bitter temperatures, is likely to disrupt
losses in more seasonal meat cuts,    overall procurement levels in all stages
with the focus on sustained growth    of the hog industry. This is likely to
through the coming months.            add even more uncertainty to the complex
                                      early next week.

   Rick Kment can be reached at


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