DTN Before The Bell Livestock

GENERAL COMMENTS:

Limited long-term interest is seen in cattle and hog futures with strong triple-digit gains in feeder cattle being offset by lackluster and mixed moves through the rest of the complex. Traders will continue to balance attention between meat values and outside markets, although trade volume is expected to remain light. Corn is trading lower in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 239 points higher with NASDAQ up 267 points.

LIVE CATTLE:

Open: Mixed. Live cattle markets continue to hold a stable pattern Thursday morning despite the continued growing support in feeder cattle futures. With nearby contracts holding narrow losses, summer contracts are offsetting this pressure with narrow 10 cent gains based on the potential for improved margins in cattle placed in feedyards in the next couple of weeks. There will be increased focus on both grain market moves and the ability to stabilize boxed beef values through the week. This could add increased underlying stability across the entire complex. Cash cattle markets are relatively quiet during the morning, but packer interest is expected to improve significantly as the day continues. Feeders still remain aggressive with asking prices at or above $114 per cwt live in the South, while Northern cattle prices are seen at $180 per cwt. Open interest rallied 1,593 positions (296,723). February contracts lost 1,509 positions (103,669) and April contracts added 1,675 positions (84,501). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Open: $1 Higher. Feeder cattle futures have quickly bounced higher in reaction to a pullback in corn and soybean markets Thursday morning. Triple-digit gains are holding in all spring and summer contracts based primarily in the weakness in feed costs. It is uncertain if continued support can hold through the day as live cattle markets are giving the feeder cattle complex little to no support during early trade. Cash index for 1/4 is $136.13, down 0.43. Open interest Wednesday fell 14 positions (42,455).

LEAN HOGS:

Open: Steady to 50 cents lower. Follow through pressure developed in all lean hog futures with traders looking for increased market support after posting triple-digit losses late Wednesday. The concern that traders may be unable and unwilling to test October highs could keep markets wandering within a wide but sideways market trend through most of January. Export shipments the last week of 2020 were extremely strong with 158,000 metric tons shipped in the last week in December. This helped to add to the strong year over year gain seen during 2020. Sales of pork were moderate at best with a total of 23,300 metric tons reported. Mexico lead the leader board, with China falling to 4th place in the weekly totals with just 2,600 metric tons sold during New Year's week. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents lower. Open interest added 1,638 positions (201,744). February slipped 1,696 positions (76,391) and April added 1,687 positions (50,868). Open interest in pork cutout futures added 13 positions (1,101). Cash lean index for 1/5 is $61.47, up 0.85. DTN projected slaughter for Thursday is 499,000 head. Saturday runs are expected near 387,000 head.

Rick Kment can be reached at rick.kment@dtn.com

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