DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong gains have quickly flooded into the cattle market once again with prices holding gains of $1 to $2 per cwt in nearby contracts. The bullish moves in cash markets and renewed support over the last couple of weeks is helping to spark increased underlying activity across all cattle trade. Hog markets are mixed in a narrow range with very little direction developing in the market. Corn prices are higher in light trade. Stock market futures are lower, Dow Jones is 38 points lower while Nasdaq is down 19 points.

LIVE CATTLE:

Open: Steady to $2 Higher. Extremely wide trading ranges are seen across the entire complex with front month February futures trading nearly $1.80 per cwt higher in the opening minutes of trade, while deferred future are having a hard time with gaining and holding 10 to 15 cent per cwt gains early Monday. The price spread between nearby and deferred contracts not only focuses on the ability for traders to look at the current market, but also sheds light on the concern of beef supplies over the next year to year and a half. Spot prices are holding premiums of nearly $10 per cwt over deferred futures trade, which could cause some long term shifts across the complex. Cash cattle markets remain silent early Monday with show list distribution and inventory taking through most of the day. The sharply higher prices seen late last week helped to push prices to $126 to $127 live basis while dressed prices are at $200 per cwt. All markets are $3 to $5 higher as the end of last week. Open interest Friday added 2,630 positions (365,950). Spot February lost 2,507 positions (41,046) and April contracts gained 1,843 positions (149,858). DTN projected slaughter for Monday is 117,000 head.

FEEDER CATTLE:

Open: $1 to $2 Higher. Strong follow through buying support is quickly moving through all cattle trade Monday morning. Fueled by the late week rally which pushed prices nearly $3 per cwt higher in front month feeder cattle futures and strong gains in cash cattle trade, the overall support through the market is offsetting any bearish tone in the cattle on feed report as these increased placements were already factored into the market through the middle of last week. Cash index for 1/25 is listed at $147.06, down 0.62. Open interest Friday added 832 positions (54,679).

LEAN HOGS:

Open: Mixed. Hog futures continue to remain stuck in a sideways trend with prices hovering from 15 cents lower to 30 cents higher in light trade. The overall lack of direction through the complex continues to draw traders into the complex in a slow but steady pattern with no significant market movement expected through the end of the month. Cash hog trade Monday is expected steady to $1 lower. Most bids are expected to be steady to weak. Open interest Friday fell 1,142 positions (246,533). Spot month February fell 1,365 positions (21,144) and April lost 111 positions (106,057). Cash lean index for 1/25 is $73.77, unchanged. DTN projected slaughter for Monday is expected to be 465,000 head.

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

(SK)

Copyright 2018 DTN/The Progressive Farmer. All rights reserved.