DTN Early Word Opening Livestock 04/07 06:29
Could the Worst Be Over?
Strong end-of-the-day gains in most livestock trade Monday combined with
active outside market support gives hope that a market bottom may have been
set. Lower new COVID-19 cases and deaths after a potential peak on Saturday is
creating optimism that better times are ahead.
By Rick Kment
Cattle: Steady Futures: Mixed Live Equiv $149.23 -0.20*
Hogs: Lower Futures: Higher Lean Equiv $ 62.61 +0.32**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle interest remains quiet early Tuesday morning following limited
activity on either side Monday. It is likely that most cash market movement
will be delayed until midweek or later, but the focus on reduced processing
speeds is likely to create more limited access to the market by many feeders
over the near future. The underlying support in cattle futures prices,
especially gains in deferred contracts trade early in the week, is likely to
limit downward pressure this week. The more immediate concern for the entire
beef industry and market is the reported cases of COVID-19 at different plants.
This has led to suspended production at two plants to date, although additional
production losses are expected as plants focus on intense cleaning and moving
up planned cleaning closures for the near future. Increased absenteeism at many
of these plants is also limiting overall capacity at plants that have remained
open and willing to try to keep production lines stable. Futures prices are
expected mixed early Tuesday morning. On Monday, April futures posted expanded
limit losses, while all other contracts except for June futures posted
moderate-to-strong gains, creating a divide between immediate price levels and
a potential market recovery for the rest of the summer. With limited hope in
new COVID-19 cases, which are below Saturday's high levels, is creating
optimism. The Dow Jones closing over 1,600 points higher Monday with another
strong rally during overnight trade is sparking potential optimism through the
beef complex. Tuesday slaughter is expected at 118,000 head.
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