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Lean hogs were expected to open steady to firm, market analysts said.
"We're not trading just cattle right now," a Texas analyst/broker said. "We're trading commodities in general," and the commodities appear to have taken more off last week than the stock market would have suggested.
In addition, the Dow Jones Industrial Average futures market overnight is up, suggesting a turnaround is in the wind in this guiding market as well, market analysts and brokers said.
Market analysts said the strong correlation between commodities and equities markets remains in place, even when it doesn't make sense from a fundamental standpoint. It's a fact of life for the time being, so the call for cattle, along with other commodities markets, is for some strength after last week's declines, they said.
Many market analysts said they expected the wide basis with the cash market to begin narrowing this week prior to December's expiration at the end of the month. They did not say whether they thought futures would rise more than cash would decline, but feeders in the plains hope futures comes up to meet cash since unhedged feeders likely are losing more than $200 a head already.
Beef markets dropped hard last week, but cattle traders Monday said a possible rally in cattle futures depended on a rally in beef markets and orders this week.
Pork Complex
Lean hog futures are called flat to higher on expected strength in stock prices and possible broad-based buying of commodities. Corn prices in overnight trading are higher along with a 2.5% gain in stock futures prices, which may provide a spark for hog futures, analysts said.
Wholesale pork prices Friday were up $1.53 per hundredweight at $61.77, which also may be viewed as supportive for hogs. Ham prices, however, are expected to decline this week and most of Friday's gain came from picnics, and brokers and analysts said the advance could be short-lived so the market may take a wait-and-see attitude concerning pork prices.
In most-active February hogs, the 20-day moving average made a bullish cross through the 40-day line on Friday, and the zone around these lines may provide solid support this session.
December, which will expire on Friday, will likely track along with the cash direction throughout the week, analysts said.
Belly futures are also called flat to firm on possible spill-over support from lean hogs and cattle.
(To access the daily livestock market data recap report, keyword search for "Livestock Market Fundamental Data Recap.")
-By Lester Aldrich, Dow Jones Newswires; 913-322-5179 lester.aldrich@dowjones.com
-By Curt Thacker, Dow Jones Newswires; 913-322-5178; curt.thacker@dowjones.com
(END) Dow Jones Newswires
12-08-08 0933ET
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