DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm triple-digit gains have quickly developed across the entire cattle complex with live cattle futures holding gains of $1 per cwt higher in most contracts, although a couple nearby contracts have reached early gains of $1.50 per cwt. The overall support across the complex continues to be seen in even more aggressive price support in the feeder cattle trade. Hog markets are mixed in narrow to moderate price shifts early Tuesday with traders looking for outside market direction. Corn futures are higher in light trade. Stock market futures are higher, Dow Jones is 85 points higher while Nasdaq is up 55 points.

LIVE CATTLE:

Open: $1 higher. Strong triple-digit gains have quickly but quietly moved into the live cattle complex early Tuesday morning. The focus on higher prices to start out the new year has allowed increased buyer support to move through the complex and brought increased overall support to the entire complex. Traders are looking for increased longer term direction through early January, and the potential to spark firm beef values over the next couple of weeks could go a long way in drawing active buyer support back to the market. Cash cattle activity is expected to remain at a standstill with inventory taking and show list distribution for early 2018 taking place through most of the morning. Bids and asking prices are not yet developed and may be the second half of the week until any sense of direction is seen. Open interest Friday added 2,473 positions (335,368). Spot December lost 238 positions (91) and February contracts fell 221 positions (120,004). DTN projected slaughter for Tuesday is 118,000 head.

FEEDER CATTLE:

Open: $1 to $1.50 higher. Initial trade early Tuesday remains firm to sharply higher although overall light volume is seen across the complex. This is helping to bring traders back to the market following additional strong cash cattle trade at the end of last week and the long holiday weekend. The potential to hold aggressive early gains depends more on the ability to draw active traders to the market through the entire session than fundamental factors at this point. Cash lean index for 12/26 is listed at $148.36, down 0.36. Open interest Friday added 172 positions (51,917).

LEAN HOGS:

Open: Mixed. Initial 2018 trade in lean hog futures essentially picked up where traders left off last Friday. With choppy and moderately mixed trade developing early Tuesday morning, the focus is not being placed on outside market direction and the potential to spark some additional market activity through the next few days. Early pressure is developing in nearby contracts holding losses of 60 to 80 cents per cwt. The narrow gains in deferred trade is helping to draw support back into the market, although the support is limited. Cash bids are steady to $1 per cwt higher. Most bids are steady to firm. Open interest Friday added 4,445 positions (243,562). Spot month February fell 268 positions (87,420) and April added 2,088 positions (69,213). Cash lean index for 12/26 is $61.59, down 0.03. DTN projected slaughter for Tuesday is 465,000 head.

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

(SK)

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