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DTN Early Word Opening Livestock       01/27 06:35
   Market Stability Sought Following Cattle on Feed Report

   Friday's Cattle on Feed report is expected to be viewed generally neutral as
placements, marketings and total cattle on feed came in near expectations. The
underlying weakness developing in the hog trade should be closely watched as
technical selling could easily develop early in the week.

By Rick Kment
DTN Analyst


Cattle: Steady   Futures: Mixed   Live Equiv $143.33 -0.50*
Hogs:   Steady   Futures: Lower   Lean Equiv $ 82.37 -1.39**

*  based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

   Friday's Cattle on Feed report came in as close to expected as realistically
possible with placements, marketings and total cattle on feed numbers just a
fraction of a percent away from early pre-report estimates. The focus on
growing placement numbers and growth of feedlot supplies during the month of
December is no surprise to the industry. The fact that these larger supplies
will likely heavily impact supplies through the last half of the year continue
to create a reality that even greater beef demand will be needed through 2020
to maintain current price levels. Cash cattle trade last week started to
develop midweek, as prices ended the week following limited clean up activity
through the rest of the week. This left prices steady with the previous week at
$124 live in the South and $199 dressed in the South. The overall lack of
support in cash cattle markets through the month of January is disappointing
given the aggressive need for packers to find market-ready cattle through the
supply-tightened first quarter. Although packers are expected to still remain
aggressive in fueling active slaughter rates, the concern is that recent
weakness in futures trade and lackluster boxed beef values may cause limited
cash market erosion through the upcoming weeks. Futures trade is expected mixed
in a limited trading range early Monday morning. Although Friday's Cattle on
Feed report comes in as expected, the strong growth in placements and overall
cattle on feed numbers is still a hard pill to swallow, and is likely to carry
some negative price implications early Monday morning. Monday slaughter runs
are expected near 121,000 head.
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