DTN Before The Bell Livestock

Continued Hog Market Support Sparks Additional Interest

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)

GENERAL COMMENTS:

Active gains in lean hog futures have helped to spark renewed support through the entire complex. The wild moves in pork values is driven by extreme swings in Ham and Belly prices over the last month. This may continue to keep markets moving in a volatile pattern over the near future. Cattle futures are mixed following additional gains in corn prices Thursday morning. Corn is trading higher in light to moderate trade. Stock markets are mixed in morning trade. Dow Jones is 31 points lower with NASDAQ up 6 points.

LIVE CATTLE:

Open: Mixed. Limited activity and interest is seen in live cattle futures with traders holding single-digit price shifts through most of the complex. Although April futures are showing slight gains, and breaking through the $119 per cwt levels, the ability to hold prices above these price points and spark renewed interest late in the week is more uncertain. This could leave prices hovering under resistance levels once again with more focus placed on fundamental factors like cash cattle trade and boxed beef values. Cash cattle markets are quiet Thursday morning following light to moderate trade midweek. The sales in the South at mostly $110 per cwt is generally steady with last week's market, and is creating moderate disappointment through the entire complex. Asking prices still remain near $112 per cwt in the South and hard to pin down across the North, but bids are expected to remain subdued through most of the day. With the upcoming cattle on feed report, it is uncertain just how active packers will be Thursday, or if they will wait to see if the report will be able to swing momentum further in their favor. Open interest slipped 766 positions (318,945). February contracts lost 3,700 positions (53,216) and April contracts added 1,219 positions (129,536). DTN projected slaughter for Thursday is 120,000 head.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

FEEDER CATTLE:

Open: Steady to 50 cents lower. Firm underlying pressure is seen early Thursday morning with the focus on renewed buyer support in corn trade has once again gained the full attention of the feeder cattle market. Although losses are still being held in check and previous market optimism seems to be staying close enough to quickly jump in if there is a lull in selling, the tone of the market is starting to shift as traders have rallied prices nearly $3 per cwt over the past couple of days. Further position taking is likely to be seen through the upcoming session, with moderate emphasis being placed on Friday's cattle on feed report. Cash index for 1/19 is $132.81, down 0.09. Open interest Wednesday fell 227 positions (40,363).

LEAN HOGS:

Open: Mixed. With the exception of spot February contracts, which have opened slightly lower, firm follow-through buyer support continues to develop across lean hog trade. This market shift is helping to narrow the gap on early January highs set during the first couple days of trade during the year. A move above $174.10 per cwt would not only signal new 2021 highs, but would likely spark additional support due to prices moving through short and long term resistance levels. Variable shifts in pork values continue to add violent swings through the entire pork and hog complex, leaving very little focus on traditional and technical market swings. These price gyrations continue to be focused on wide market swings in pork values during the month of January. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents higher. Open interest gained 995 positions (208,237). February liquidated 2,107 positions (30,524) and April added 2,053 positions (85,755). Open interest in pork cutout futures added 10 positions (1,051). Cash lean index for 1/19 is 65.67, down 0.25. DTN projected slaughter for Thursday is 497,000 head. Saturday runs are projected at 321,000 head.

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

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Rick Kment