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DTN Early Word Opening Livestock       02/25 06:31
   Traders Search for Support Following Monday's Market Tumble

   Continued widespread market concerns are seen early Tuesday following limit
losses in cattle futures Monday. The underlying fear of widespread coronavirus
impacting the overall global and domestic economies as more cases are seen
outside of China could limit short-term buyer support.

By Rick Kment
DTN Analyst

Cattle: Steady   Futures: Lower   Live Equiv $138.20 +0.92*
Hogs:   Steady   Futures: Lower   Lean Equiv $ 71.27 +1.32**

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


   Cash cattle trade activity took a back seat Monday to the aggressive
liquidation in futures trade and widespread commodity and financial losses
early in the week. Bids and asking prices are undeveloped and likely to remain
so until there is some sense of stability in the futures trade. Showlists were
mixed early in the week, which continues to show limited availability of
market-ready cattle through the end of the month even after light-to-moderate
trade developed last week. It is likely that cash market trade will be pushed
to the last half of the week, and despite attempts to hold prices steady to
higher by feedlot managers, the bearish tone of futures trade is going to make
this a difficult task. Futures trade is expected to remain lower early Tuesday,
although the complex still remains oversold and currently driven by fear that
the global economic wheels may be falling off due to the spread of coronavirus.
As always, fear is a very poor measuring tool, as many times the overall
movements driven by the fear are not rational, especially when it comes to the
market. Because of the price point, the beef market is the most vulnerable to
an economic downturn than any of the other meat markets, creating the extreme
reaction seen early in the week. With April live cattle futures and most feeder
cattle futures closing limit lower Monday, expanded trade limits are available,
creating the opportunity for markets to swing $4.50 per cwt in live cattle
contracts and $6.75 per cwt in feeder cattle before trade is halted. Given the
still bearish tone in outside markets, the potential for additional widespread
liquidation remains strong despite any fundamental support developing in meat
values and domestic demand support likely to build over the upcoming weeks.
Tuesday slaughter is expected near 121,000 head.
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