DTN Early Word Opening Livestock 01/09 05:54

DTN Early Word Opening Livestock 01/09 05:54 Hog Paper Staged to Open Moderately Higher Lean hog futures should open moderately higher, supported by follow-through buying and the strengthening case trade. Expect the cattle complex to begin with mixed prices thanks to a combination of residual selling and short-covering. By John Harrington DTN Livestock Analyst Cattle: Steady/Weak w/Mon Futures: Mixed Live Equiv $141.39 + .52* Hogs: $1-2 HR Futures: 50-100 HR Lean Equiv $ 83.61 - .65** * based on formula estimating live cattle equivalent of gross packer revenue ** based on formula estimating lean hog equivalent of gross packer revenue GENERAL COMMENTS: The unusual activity seen in the cash cattle trade makes it very difficult to predict how the Tuesday market will behave. Normally, it would be a yawner with bids and asking prices poorly defined. Yet now that typically sleepy Monday has generated light to moderate trade volume in most feeding areas, all bets are off for a laid back Tuesday. Apparently, $120 bids became attractive to many risk managers Wednesday when they implied a positive basis of $3 to $4. Indeed such basis strength is extremely difficult for hedgers to ignore, who probably initially assumed selling cattle even to $1 under spot Feb. Will the basis stay this strong? Further cash business (both price level and timing) will probably turn on the board's ability or inability to stabilize. Live and feeder futures should open on a mixed basis linked to follow-through selling on one hand and short-covering (profit-taking on the other).