DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures are mixed to mostly lower early Wednesday morning. The overall lack of support in the complex may add even more volatility to the market. There is growing uncertainty surrounding livestock fundamentals as the week progresses. This could add to market softness through the rest of the day. Corn prices are steady to higher in light trade. Stock markets are lower, Dow Jones is 166 points lower while Nasdaq is down 26 points.

LIVE CATTLE:

Open: Mixed. Initial live cattle futures trade is setting nearby gains against deferred contract pressure early Wednesday morning. There is some underlying market weakness seen in the complex following the inability for feeder cattle trade to post early gains in most contracts. But the firmness trying to develop in nearby live cattle futures is helping to spark some additional trade activity. This could help to bring some additional support to the entire market with prices moving 5 to 20 cents higher during early trade. Cash cattle trade remains quiet early Wednesday morning. Very light trade which developed late Tuesday in several areas posted live trade activity at $126 per cwt. This is generally steady with last week's prices, and it is yet to be determined if this will set the tone for the week. Asking prices are seen from $128 to $130 live and $207 and higher dressed. There may be some additional bids stepping into the market through the day which may help to solidify market direction. Open interest Tuesday added 72 positions (372,574). Spot month April contracts lost 4,253 positions (117,174) and June contracts added 2,039 positions (134,963). DTN projected slaughter for Wednesday is 118,000 head.

FEEDER CATTLE:

Open: Mixed. Feeder cattle futures are trading mostly lower in a narrow trading range early Wednesday morning. Front-month March futures have posted a narrow, 5 cent gain during the first few minutes of trade. But the 5-to-20-cent losses in all other contract months may quickly erode any support lingering in the market. At this point, volume remains extremely light, which may create uncertainty to the complex in general. The limited support in live cattle trade could help to bring a sense of stability to feeder cattle later in the week. Cash index for 3/5 is listed at $145.25 down 0.19. Open interest Tuesday fell 51 positions (56,209).

LEAN HOGS:

Open: 30 to 90 cents lower. Moderate pressure is slowly stepping back into the lean hog complex with increased market uncertainty the main cause of the price pullback. Nearby contracts are holding early losses of 60 to 90 cents per cwt, with very little active volume developing across the complex. This may add even more volatility to the entire market with traders focusing on increased activity through the rest of the livestock market as well as outside trade through the rest of the week. Cash hog trade Wednesday is expected steady to $1 per cwt lower. Most bids are expected steady to weak. Open interest Tuesday liquidated 1,436 positions (223,766). Spot month April fell 3,807 in positions (71,873) and June gained 1,552 positions (56,522). Cash lean index for 3/5 is $67.52, down 0.17. DTN projected slaughter for Wednesday is expected to be 458,000 head. Saturday runs are expected at 115,000 head.

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

(SK)

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