DTN Early Word Opening Livestock 09/08 05:48
Short Covering Expected to Sponsor Moderate Rebound in Cattle Futures
Live and cattle contracts are likely to open higher thanks to short covering
and ideas that yesterday's sell-off was overdone. Lean hog futures should start
out on a mixed basis linked to a combination of residual selling and profit
taking.
By John Harrington
DTN Livestock Analyst
Cattle: Cash Steady Futures: 10-30 HR Live Equiv $111.27 - 0.61*
Hogs: Cash Steady-.50 LR Futures: mixed Lean Equiv $ 96.58 - 0.84**
* new formula estimating live cattle equivalent of gross packer revenue
** new formula estimating lean hog equivalent of gross packer revenue
GENERAL COMMENTS:
Cattle heads are still spinning from yesterday's bearish ambush that knocked
live and feeder cattle futures sharply lower. While the long-term uptrend still
remains intact, specs and commercial are clearly unnerved relative to near-term
price potential. Yet now that spot October live is suddenly back below recent
feedlot sales, would be sellers will probably call off the dogs until immediate
cash potential because more apparent. Opening bids at midweek should start out
around $96 in the South and $151-152 in the North, and that really not far from
steady money with last week. Asking prices are tough to pin down in the wake of
crashing futures. Generally speaking, feedlot managers should start out around
$98-99 in the South and $155 plus in the North. Look for live and feeder
contracts to open moderately higher based on short covering and chances of cash
stability.
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