Tuesday, March 31, 2020  
 
 
 
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DTN Early Word Opening Livestock       03/31 06:36
   Market Pressure Expected as March Comes to an End

   The month of March is coming to an end, and with it many hope the nightmare
that has developed over the last month will end too. Underlying pressure is
expected to be seen once again Tuesday, especially in lean hog trade, which
posted another limit loss Monday.

By Rick Kment
DTN Analyst



Cattle: Lower  Futures: Lower  Live Equiv $162.99 -1.82*
Hogs:   Lower  Futures: Lower  Lean Equiv $75.60 -3.08**

*  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 activity remains quiet with limited interest from either side
going into Tuesday morning. The strong rally in prices seen last week may be a
limiting factor in follow-through support through the week, especially given
the fact that cattle futures have significantly backed away from previous
highs. The underlying pressure developing in boxed beef values is pointing to
expected demand slumps as retailers seem to have caught up with the surge of
buying activity seen over the last couple of weeks and significant demand
erosion is likely to be seen from the food service industry. With the
expectation that social distancing and "stay home orders" that are in place are
being extended through the end of April, this will continue to significantly
affect the amount of beef moving through the restaurant systems. Even though
businesses are trying to stabilize business through drive thru, carry out and
delivery services, this still is a far cry from replacing the "dine in" demand
across the nation. Reports that JBS will reduce slaughter plant production due
to a COVID-19 case in an Eastern U.S. plant will likely add increased pressure
to live cattle futures. At this point, it is not expected that this will affect
fabrication or grinding operations, and should have a limited impact on the
overall daily slaughter levels, but it still may have a significant impact on
futures and cash prices as this is the first indication that Coronavirus will
affect production levels of beef production. Tuesday slaughter is expected at
118,000 head.
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