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DTN Early Word Opening Livestock       02/19 06:35
   Cattle Futures Expected to Churn Higher During Morning Trade

   Firm follow-through support during early-week trade is helping to sustain
additional buyer support through cattle trade Wednesday morning. This
underlying support is helping to build momentum through the complex.

By Rick Kment
DTN Analyst



Cattle: Steady Futures: Higher Live Equiv $138.37 -1.04*
Hogs:   Steady Futures: Mixed Lean Equiv  $69.93  +2.15**

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

GENERAL COMMENTS:

   Cash cattle trade remains at a standstill going into Wednesday morning with
both sides hovering on the sidelines waiting for more direction in futures
trade and wholesale beef values before jumping into the market and offering
bids or pricing cattle. The strong market rally over the past three trading
sessions combined with firm wholesale beef price support last week will create
optimism in feedlot managers as they aggressively price cattle, expecting
nothing less than steady money by the end of the week. Saddled with eroding
packer margins and the outlook of additional cattle numbers available at their
disposal in the next six to eight weeks, packers are expected to fight hard to
keep prices steady to lower through the week. This could create a significant
standoff that may not develop in cash cattle being sold until late Friday,
potentially after the release of the cattle on feed report Friday afternoon.
Early estimates for the cattle on feed report point to light to moderate gains
in all categories, although moderate analyst ranges develop, leaving
uncertainty heading into the end of the week. Futures trade is expected steady
to higher early Wednesday morning as the underlying momentum continues to build
through the cattle complex following April futures able to hold prices above
$120 per cwt, and clearly establish a market low last week near $117 per cwt.
Although sharp follow-through gains will be difficult to sustain over the near
future, the potential for a more steady to firm market growth could help to
build increased confidence through the entire complex. Wednesday slaughter is
expected near 121,000 head.
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