DTN Before The Bell-Livestock

GENERAL COMMENTS

Light to moderate pressure is redeveloping through livestock futures with additional losses across the stock market adding to the trade concern. This is limiting any buying interest early Tuesday morning, but also is keeping overall volume extremely light. Corn prices are higher in light trade. Stock markets are lower, Dow Jones is 306 points lower while Nasdaq is down 65 points.

LIVE CATTLE:

Open: 20 to 80 cents lower. Follow-through pressure is developing across all cattle trade, with live cattle markets taking a back seat to the feeder cattle complex at this point. There is still a lot of attention being placed on the direction and volatility in the stock market. The moves lower in the stock market Monday as well as pressure over the last few days has caused many in the cattle market to wonder if the same type of selloff is moving into other markets. Cash cattle activity is still quiet early Tuesday morning with bids still undeveloped. Although asking prices are generally still undefined in most areas, there have been a few cattle priced at $130 through the south. This could be a good starting point for most live cattle asking prices this early in the week, although bids may not be seen until Wednesday or later. Open interest Monday added 1,591 positions (368,697). Spot February lost 1,742 positions (22,431) and April contracts gained 721 positions (152,233). DTN projected slaughter for Tuesday is 118,000 head.

FEEDER CATTLE:

Open: 30 to 70 cents lower. Firm pressure has quickly redeveloped across livestock markets following concerns of further pressure in the stock market. This has allowed feeder cattle markets to turn lower once again with moderate losses seen early Tuesday. Even though volume remains extremely light, the pullback in the market is creating much more concern to the entire cattle trade than the one day potential correction seen Monday. With increased pressure comes the possibility that traders may once again back away from previous gains. Sluggish activity is expected to be seen through most of the morning. Cash index for 2/2 is listed at $148.12, up 0.09. Open interest Monday added 412 positions (56,389).

LEAN HOGS:

Open: Steady to $1 lower. Moderate losses have continued to step into the complex with traders focusing on continued pressure in the stock market and concern that additional widespread losses will not only have implications on outside markets, but will heavily impact the overall move in most commodity markets. Nearby contracts are holding losses at or near $1 per cwt while deferred contracts have seen much more subdued pressure in the opening minutes of trade. This could limit additional buyer support over the next couple of sessions. Cash hog trade Tuesday is expected 50 cents lower to $1 higher. Most bids are expected to be steady. Open interest Monday added 1,972 positions (240,432). Spot month February added 118 positions (15,024) and April added 762 positions (101,248). Cash lean index for 2/2 is $74.48, up 0.38. DTN projected slaughter for Tuesday is expected to be 465,000 head.

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

(SK)

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