DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed trade in all livestock futures continue to develop in the opening minutes of trade. This is limiting additional market direction in cattle and hog futures with very little market activity expected to break out of this sluggish and well defined narrow range. The potential that outside markets may bring some additional activity back to the market during the next couple of days is very likely. Corn prices are lower in light trade. Stock markets are higher, Dow Jones is 39 points higher while Nasdaq is up 19 points.

LIVE CATTLE:

Open: Mixed. Initial trade is mixed in live cattle futures with very little direction developing as traders enter the month of March. Nearby prices are steady to 30 cents per cwt lower, while light support is holding in deferred contracts. The triple digit losses in feeder cattle trade Wednesday is gaining the attention more than the previous losses seen in live cattle trade. Wider market shifts may develop over the coming hours depending on the depth of trade activity in all cattle markets and early moves in outside markets. Cash cattle interest remains quiet early Thursday morning following light to moderate trade Wednesday. Prices developed at $2 per cwt lower than last week through the South and steady to weak in the North. So far, bids are undeveloped Thursday morning, but the tone of the market is expected to have already been set given the midweek trade. Some additional trade is likely to be seen in several areas over the next couple of days. Open interest Wednesday added 371 positions (377,283). Spot month February contracts lost 646 positions (12) and April contracts slipped 2,659 positions (136,451). DTN projected slaughter for Thursday is 117,000 head.

FEEDER CATTLE:

Open: Mixed. Narrow losses are being offset by slim gains in most contract months as very little direction is seen in the opening minutes of trade Thursday. This is being viewed as somewhat protectionary as traders enter the month of March with increased longer term support uncertain. Although cattle numbers continue to shed a weaker tone of the market, the focus on building seasonal demand is likely to keep buyers close to the action through the next several weeks. Prices are likely to remain mixed in a narrow range through most of the morning as many traders turn their focus to live cattle direction and outside markets. Cash index for 2/27 is listed at $147.94, up 0.18. Open interest Wednesday fell 32 positions (57,928).

LEAN HOGS:

Open: Mixed. Initial trade in the lean hog futures complex continues to focus on the ability to slowly bring traders back to the market in early March. An attempt to stabilize the market follow a move lower that posted the lowest prices since September is only having limited success. Traders are faced with moderate to strong pork demand that is able to aggressively move product and keep cutout values from dipping significantly in the last few days. But the inability to rally cash hog prices as packers continue to rebuild margins is limiting the support through the futures complex. Prices are hovering from 15 cents lower to 15 cents higher in most contracts, with little to no additional market direction expected through the morning. Cash hog trade Thursday is expected steady to $1 lower. Most bids are steady to 50 cents lower. Open interest Wednesday added 3,100 positions (233,804). Spot month April fell 343 in positions (85,249) and June gained 1,880 positions (51,612). Cash lean index for 2/27 is $68.57, down 0.26 DTN projected slaughter for Thursday is expected to be 465,000 head. Saturday runs are expected at 131,000 head.

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

(SK)

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