DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures remain mostly lower in light trade activity. This lack of direction in the market is focusing on the pressure in feeder cattle and lean hog trade. Corn futures are fractionally lower in light trade. Stock market futures are higher, Dow Jones is 87 points higher while Nasdaq is up 25 points.

LIVE CATTLE:

Open: Mixed. Light buying activity has slowly developed across the live cattle complex with traders focusing on short covering activity through the early minutes of trade. This has allowed for increased buyer support to develop in most markets, although the focus on market stability remains light due to previous pressure and soft deferred contract moves. There is growing concern that prices could chop around in the current range over the near future, which may limit longer term support. Cash cattle markets are quiet following trade that trickled into the market during the first half of the week. Some clean-up trade is not out of the question, although the tone of the market has been set and any additional trade will likely fall in line with previous market ranges. Open interest Wednesday added 582 positions (345,974). Spot February lost 7,570 positions (87,649) and April contracts gained 5,439 positions (120,838). DTN projected slaughter for Thursday is 118,000 head.

FEEDER CATTLE:

Open: $1 to $1.50 lower. Follow-through pressure is expected to redevelop across the feeder cattle market. This may add even more weakness to the complex as traders continue to focus on the building softness in all cattle markets early in the week. Front month January futures are holding losses of $1 per cwt as traders continue to steadily work prices lower during the week. Cash lean index for 1/8 is listed at $152.42, down 1.50. Open interest Wednesday added 241 positions (51,811).

LEAN HOGS:

Open: Steady to 80 cents lower. Moderate pressure is developing across the lean hog futures complex with traders focusing on the moderate to strong pressure seen in nearby trade midweek. This lack of support could further erode market movements through the week and add even more pressure to futures trade. Cash markets are still expected to remain firm, although the tone of the market is likely to be shifting through the end of the week. Cash bids are steady to $2 per cwt higher. Most bids are 50 cents to $1 higher early Thursday. Open interest Wednesday added 710 positions (249,729). Spot month February fell 7,904 positions (58,242) and April added 4,444 positions (87,438). Cash lean index for 1/08 is $66.37, up 0.72. DTN projected slaughter for Thursday is expected to be 465,000 head. Saturday runs are expected at 159,000 head.

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

(SK)

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