DTN Early Word Livestock Comments 04/19 06:30
There Is Strong Hope for Stability
Traders have had the weekend to mull over last week's event. It is likely
that no solid conclusions have been drawn, but it is a new week and livestock
markets are oversold. Traders may cautiously test the market on the buy side.
DTN Contributing Analyst
Cattle: Steady Futures: Mixed Live Equiv: $204.23 -0.14*
Hogs: Steady Futures: Mixed Lean Equiv: $118.60 -1.31**
* based on formula estimating live cattle equivalent of gross packer revenue.
(The Live Cattle Equiv. Index has been updated to depict recent changes in
live cattle weights and grading percentages.)
** based on formula estimating lean hog equivalent of gross packer revenue
One has to believe the selling pressure should subside soon. Cattle futures
have fallen seven consecutive trading days, pushing the market into an oversold
condition. Even though cash cattle traded steady to $1.00 higher last week,
rising feed prices and poor exports were the overriding factor. The trend has
turned lower for the time being. Packers will use this to their advantage and
likely only want to purchase cattle at steady prices this week despite very
strong boxed beef prices last week. They will still need to purchase cattle for
strong demand, but the market may have turned. Weakening futures generally
result in feedlots being more willing to sell rather than wait and continue to
feed market-ready cattle and avoid a potential drop of prices. There is one
technical consolation, and that is that April and June futures established an
inside trading day Friday. However, later contracts did not show the same as
they made lower lows.
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