DTN Before The Bell-Livestock

GENERAL COMMENTS

Early trade in the livestock complex has continued to focus on narrow price ranges with mixed trade developing in both hog and cattle trade during the initial minutes of market activity. There is growing uncertainty as to just how much additional support is seen in the complex which could keep overall trade sluggish through most of the trade session. Corn prices are lower in light trade. Stock market futures are higher, Dow Jones is 24 points Higher while Nasdaq is up 34 points.

LIVE CATTLE:

Open: Mixed. Narrow trading ranges have been seen early Tuesday morning with pries holding from 10 cents to 15 cents lower per cwt in early trade. The inability to follow the triple digit gains seen Monday with strong buyer support is causing some questions to rise about the ability to add strong commercial buyer interest to the market. This may add uncertainty to the complex over the near future, although a portion of the morning losses are associated with position taking after nearby contracts posted strong gains on Monday. Cash cattle markets are quiet with bids and asking prices yet to be established. It is expected that overall market interest will remain sluggish as most trade will likely be pushed off until the end of the week. This may add to the uncertainty of direction in cattle futures as traders look for more direction from packers and feedlot managers. Open interest Tuesday slipped 213 positions (353,837). Spot February lost 3,967 positions (49,514) and April contracts gained 1,006 positions (145,589). DTN projected slaughter for Tuesday is 109,000 head.

FEEDER CATTLE:

Open: Mixed. Light activity is seen in the feeder cattle market with trade early in the morning focusing on mixed market shifts from 10 cents lower to 10 cents higher. The overall lack of direction in the market follows narrow gains that developed Monday. There is the potential to draw increased buyer support back into the market with traders focusing on early week support and trying to bounce back from pressure seen during early January. But in order to draw active trade back into the market, support needs to be seen across all cattle fundamentals, which could help to spark increased overall long term market direction. Cash lean index for 1/18 is listed at $148.01, up 1.53. Open interest Monday lost 76 positions (53,605).

LEAN HOGS:

Open: Mixed. Narrow trading ranges are seen once again early Tuesday morning as light buyer support is slowly trickling into the complex based on short covering activity. The 15 cent per cwt gain in front month February futures is helping to bring a sense of stability to the market, while the rest of the market is holding narrow losses of 2 to 20 cents per cwt. The narrow trading ranges may continue to be seen through the rest of the day with traders not only focusing on the ability to stabilize cash hog and pork values, but also the movements in cattle trade as well as outside market direction. Cash hog trade Monday is expected to remain 50 cents higher to $1 Higher. Most bids are expected to be steady to 50 cents lower. Open interest Monday added 270 positions (247,430). Spot month February fell 2,148 positions (28,760) and April added 614 positions (106,283). Cash lean index for 1/19 is $73.40, down 0.27. DTN projected slaughter for Tuesday is expected to be 440,000 head.

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

(SK)

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