DTN Before The Bell Livestock

GENERAL COMMENTS:

Feed costs and grain prices continue to be a significant focus in all livestock trade Friday. This is leaving lean hog futures mixed and light to moderate pressure developing across all cattle trade. Corn is trading mixed in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 12 points higher with NASDAQ up 118 points.

LIVE CATTLE:

Open: Steady to 70 cents lower. Live cattle futures remain under the most significant pressure of all livestock trade early Friday morning. Although cash markets appear to be steady to firm for the week, this is slightly disappointing given the momentum seen in the market over the last several weeks. Nearby live cattle futures continue to slowly back away from recent market highs, although the ability to stay within the top end of this range does not leave a renewed market rally out of the question. With continued gains in covid cases, and the impact on meat demand in food service industries, most traders are extremely cautious. Cash cattle interest remains subdued following light to moderate trade over the last two days. Live trade developed at $112, generally steady with last week, while dressed business is mostly $176 to $177 per cwt, which is steady to $1 higher than last week. Some additional trade is expected through the day, although the tone of the market may already be set. Open interest rallied 1,956 positions (298,723). February contracts lost 1,509 positions (103,669) and April contracts added 1,675 positions (84,501). DTN projected slaughter for Friday is 118,000 head.

FEEDER CATTLE:

Open: Steady to 40 cents lower. Firm pressure is seen in feeder cattle futures as traders adjust from the previous gains. The concern that corn markets may continue to move higher, breaking above the $5 per bushel level before the end of the week may add even more pressure into cattle trade. Limited volume is expected Friday, which could keep price moves narrow. Cash index for 1/6 is $136.13, down 0.43. Open interest Thursday fell 122 positions (42,455).

LEAN HOGS:

Open: Mixed. Interest in lean hog trade Friday morning remains limited with prices hovering within narrow to moderate ranges as very little market direction is developing through the end of the week. The potential that traders will continue to adjust positions following a very wild market shift during the first week in January is putting even more pressure on spot contracts, while helping to support deferred contract months as traders look toward long term support following pork demand support during the second half of 2021. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents lower. Open interest added 1,157 positions (201,744). February slipped 1,696 positions (76,391) and April added 1,687 positions (50,868). Open interest in pork cutout futures fell 29 positions (1,072). Cash lean index for 1/6 is $62.96, up 0.54. DTN projected slaughter for Friday is 489,000 head. Saturday runs are expected near 387,000 head.

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

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