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DTN Early Word Opening Livestock       02/21 05:56
   Continued Pressure Likely

   Sharp losses in hog futures have quickly turned a weak market even more
bearish as traders try to find any sign of support. Cattle markets have
continued to firm but may remain unstable.

By Rick Kment
DTN Analyst

Cattle: Steady               Futures: Mixed   Live Equiv: $145.02 +0.09*
Hogs:   Steady to $1 Lower   Futures: Lower   Lean Equiv: $ 64.36 -1.67**

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


   April live cattle futures have rallied $2 per cwt in the last two trading
sessions. This is starting to create uncertainty through the nearby contracts
and the entire cattle complex. Each weekly rally in the last two months has
been followed by a moderate-to-firm retraction that has pulled prices away from
contract highs. This is expected once again, but uncertainty remains as to when
buyers will back away from the market. The sharp losses in hog trade have
provided a safe haven for additional noncommercial traders looking for a place
to invest, given the landslide in nearby lean hog trade. This trader group
could quickly leave cattle futures if a market bottom develops in the hog
complex. Cash cattle trade is undeveloped for the most part, with just a
handful of cattle sold in Texas. A wide gap between asking prices and bids will
continue to keep packers and feeders at odds until the end of the week.
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