DTN Before The Bell-Livestock

Firm Buying Trickled Into Complex Monday Morning

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Mixed trade is moving into all livestock markets with most contracts posting light to moderate losses in the early minutes of trade. Although the tone of the market remains extremely weak, the aggressive pressure seen in the complex is opening the door for short covering and could allow buyer support to develop during most of the morning. Corn prices are lower in light trade. Stock markets are higher, Dow Jones is 458 points higher while Nasdaq is up 135 points.

LIVE CATTLE:

Open: Mixed. Very light trade is expected to be seen through most of the morning. This will keep prices mostly mixed in a narrow range without a significant shift in outside markets. The overall tone of the market remains weak, but given the sharp pressure over the last week, everyone is already expecting additional pressure. This may allow for some moderate short covering to quickly develop through the market over the coming days. Additional moves could develop late in the session which will likely add volatility to markets as prices could bounce higher and lower in a triple digit range. Cash cattle trade and interest is expected to remain undeveloped early in the week. Typical inventory taking and show list distribution is expected to be seen through the complex most of the day Monday. This will limit bids and asking prices from developing. The Tuesday trade through the last two weeks that has developed may allow for some interest to develop in the first half of the week. But with the Easter holiday approaching, slowing chain speed will result. This could delay cash activity. Open interest Friday fell 437 positions (355,779). Spot month April contracts lost 2,657 positions (46,674) and June contracts added 998 positions (160,662). DTN projected slaughter for Monday is 117,000 head.

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FEEDER CATTLE:

Open: Mixed. Early trade Monday is adjusting to the aggressive market volatility seen late last week, more than any other factor in the complex. Prices are seen from 50 cents lower to 30 cents higher in the early minutes of trade. Short-covering activity is likely to be the main order of business through the morning. The overall tone of the market is still expected to remain bearish with previous market losses and traders taking into account a slightly bearish cattle on feed report. With placements and total cattle on feed numbers seen Friday above early estimates, there is likely to be some additional weakness carried into the market. Cash index for 3/22 is listed at $137.98 down 1.41. Open interest Friday added 887 positions (54,011).

LEAN HOGS:

Open: Mixed. Early mixed trade is seen in lean hog futures with most contracts posting prices steady to 40 cents per cwt higher. The aggressive near limit losses seen late last week is allowing for some significant short covering opportunities in the early minutes of trade. The focus on the activity seen last week could help to spark some additional buying. But aggressive price moves through most of the week is going to be needed to stabilize markets. Cash hog trade Monday is expected 50 cents to $1 lower. Bids are scattered through the range early Monday. Open interest Friday added 3,119 positions (236,583). Spot month April fell 973 in positions (27,584) and June gained 3,303 positions (96,815). Cash lean index for 3/22 is $62.32, down 0.71. DTN projected slaughter for Monday is expected to be 455,000 head.

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

(SK)

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Rick Kment