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DTN Early Word Opening Livestock 04/02 06:26

2 Apr 2020
DTN Early Word Opening Livestock 04/02 06:26 Livestock Markets Brace for Additional Losses Limit losses across all livestock markets Wednesday has brought bearish movement in the complex heading into Thursday morning. Although limited outside market support developed overnight, the concern of demand weakness for meat products weighs heavy on livestock futures. By Rick Kment DTN Analyst Cattle: Lower Futures: Lower Live Equiv $153.55 -4.17* Hogs: Lower Futures: Lower Lean Equiv $ 66.94 -2.99** * based on formula estimating live cattle equivalent of gross packer revenue ** based on formula estimating lean hog equivalent of gross packer revenue GENERAL COMMENTS: Although there still is a lot of cattle to trade in the cash cattle arena before the end of the week, the sharp losses Wednesday are expected to set the tone for the market. Light trade developed in several areas through the day Wednesday with live Southern trade falling generally $7 per cwt from last week at $112 per cwt, while dressed deals in the North are reported at $180 per cwt. This is $9 per cwt below last week's average cash price. The potential for additional futures market weakness is likely to add follow-through pressure in cash trade as the week continues. This could significantly limit the amount of cattle sold through the week. Additional sharp losses in boxed beef values midweek has started the landslide of price shifts lower as traders remain concerned of further demand erosion. As consumer buying patterns are becoming more regular after the panic buying and hoarding that pushed beef values through the roof during March, the focus on a generally shuttered food service industry and the lack of beef demand in that market space is starting to create the reality that product may continue to be backed up over the near future. Futures trade is expected mixed in light early trade Thursday with live cattle and feeder cattle having access to expanded trading limits. This would limit live cattle at $4.50 per cwt once again, while feeder cattle limit will be set at $6.75 per cwt. The strong overnight support in financial markets could help to soften the blow, but the underlying fundamental weakness in the complex continues to spark uncertainty in the complex. June futures have the potential to test long-term support and contract lows, which could spark renewed volatility though the end of the week. Thursday slaughter is expected at 119,000 head.

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