DTN Before The Bell-Livestock

Mixed Livestock Trade Brings Hope of Stability

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

Light trade is seen through the entire livestock futures complex with mixed activity developing in the early minutes of activity. The potential to hold initial gains in nearby contracts could bring additional stability to the market and help to limit additional losses through the rest of the week. Corn prices are higher in light trade. Stock markets are mixed, Dow Jones is 5 points lower while Nasdaq is up 3 points.

LIVE CATTLE:

Open: Mixed. Early trade is mixed to mostly higher with firm buyer support moving into the nearby contracts. This is allowing prices to hold gains of 40 to 50 cents per cwt during the first few minutes of trade and potentially help to spark some underlying support across the market. But the challenge remains to determine just how deep this buyer activity is, and if additional interest can develop over the near future. If gains can hold through most of the morning, the potential for market stability could start to grow through the rest of the week. Cash cattle activity remains sluggish early Tuesday morning. There was a few scattered deals inked Monday afternoon with live deals in the South at $121 per cwt. Although the weaker trend of all markets is likely going to be focused on, the overall number of cattle traded at these levels is not large enough to establish a trend. It is likely that more bids and asking prices will develop over the next couple of days. This could give a better indication of the overall market direction and trend through the week. Open interest Monday added 1,314 positions (357,044). Spot month April contracts lost 1,436 positions (45,199) and June contracts fell 400 positions (160,259). DTN projected slaughter for Tuesday is 117,000 head.

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FEEDER CATTLE:

Open: Mixed. Strong gains in nearby contracts are being offset by light to moderate selling pressure still digging its teeth into deferred contracts. Short covering is the main focus in nearby contracts with April futures moving $1.10 per cwt higher. But the concern remains on just how solidified buyers will be through the remainder of the session, not just at opening bell. This has been the challenge over the last few days with early buyers quickly exiting the market after they square positions, and allow the market to shift lower through the rest of the trading session. Cash index for 3/23 is listed at $136.68 down 1.30. Open interest Monday added 605 positions (54,590).

LEAN HOGS:

Open: Mixed. Initial trade through the entire lean hog futures remains sluggish with prices hovering from 40 cents lower to 20 cents higher. Although most contracts have posted light to moderate losses during the first few minutes of trade, there continues to be a growing search form market stability that could help to bring additional support to the complex. April futures are leading the complex lower with prices at $57.60 per cwt while concerns of longer term market pressure remain evident through the entire complex. Cash hog trade Tuesday is expected 50 cents to $2 lower. Most bids are $1 per cwt lower. Open interest Monday added 460 positions (236,971). Spot month April fell 1,973 in positions (25,554) and June gained 1,183 positions (97,984). Cash lean index for 3/23 is $61.35, down 0.97. DTN projected slaughter for Tuesday is expected to be 455,000 head. Friday runs are scheduled at 430,000 head, with 105,000 on Saturday and 390,000 on Monday.

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

(SK)

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Rick Kment