DTN Before The Bell Livestock

GENERAL COMMENTS:

Firm pressure is once again seen in live cattle and feeder cattle futures with traders searching for short-term stability. The continued steady to higher moves in hog futures is attracting more trade interest, and could cause some cattle traders to shift to hog markets in the short term. Corn is trading higher in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 13 points higher with NASDAQ up 32 points.

LIVE CATTLE:

Open: $1 lower. Early morning weakness quickly swept through live cattle futures Tuesday. The focus on Monday's losses in nearby contracts has quickly changed the short-term direction of the market, causing traders to look for nearby support levels. This could limit buying support in the next couple of days, although the wide sideways market trend currently seen will likely limit any technical signals without markets falling sharply in the next few days. Cash cattle interest remains quiet with active trade likely to be pushed off until late in the week. Asking prices and bids are still undeveloped, but expected to improve slightly over the next couple of days. Open interest rallied 3,199 positions (301,895). February contracts lost 5,694 positions (95,800) and April contracts added 5,373 positions (91,461). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: 50 cents to $1 lower. Firm follow-through pressure is seen in feeder cattle trade with the lack of interest testing support levels of $135 per cwt in January contracts while March futures remain uncertain about the ability to hold the line at $136 per cwt levels. The renewed gains in corn prices during morning trade is sparking continued uncertainty surrounding production costs through the year. Cash index for 1/7 is $135.63, up 0.28. Open interest Monday fell 397 positions (41,922).

LEAN HOGS:

Open: Mixed. Narrow trading ranges have developed early Tuesday morning with limited, but steady support moving into most nearby contracts following the underlying momentum in pork cutout values. Trade volume is expected to remain light through most of the session with traders focusing on outside market moves and potential further gains in pork cutout values. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents higher. Open interest fell 255 positions (201,268). February liquidated 6,292 positions (67,881) and April added 3,656 positions (56,323). Open interest in pork cutout futures added 12 positions (1,084). Cash lean index for 1/7 is $63.34, up 0.38. DTN projected slaughter for Tuesday is 495,000 head. Saturday runs are expected near 259,000 head.

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

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