DTN Before The Bell-Livestock

Gains Develop Across Cattle Complex

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

Gains have quickly swept through cattle markets early Tuesday morning with traders trying to not only square positions but focus on rebuilding market confidence during early April. Hog markets are holding losses, although trade volume remains sluggish. The limit losses Monday has opened up the potential for expanded trading limits, but current lackluster activity seems far from moving prices significantly Tuesday. Corn prices are higher in light trade. Stock markets are higher, the Dowis 128 points higher,and the Nasdaq is up 36 points.

LIVE CATTLE:

Open: 30 cents to 80 cents higher. Buyers are slowly but steadily stepping up to the plate early Tuesday morning, which could cause price swings in either direction before the end of the session. Nearby contracts are heavily influenced by short-covering activity. This may add some additional market support. If gains can hold through midday, the underlying support may be enough to push prices higher for the session and could lead to additional longer-term support. Cash cattle activity is undeveloped with bids and asking prices unavailable at this point. It is likely that some token bids may develop Tuesday, although the common thought is that most trade will be delayed until later in the week. This may add some uncertainty to the entire complex. Open interest Monday fell 811 positions (356,276). Spot month April contracts lost 2,685 positions (35,703) and June contracts gained 637 positions (160,180). DTN projected slaughter for Tuesday is 118,000 head.

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FEEDER CATTLE:

Open: 70 cents to 90 cents higher. Firm buyer support is moving into all cattle trade and is most prevalent in nearby feeder cattle futures. The triple-digit prices Monday are leaving the market open for some moderate to wide price swings. This may add even more support back to the market through midweek as traders attempt to bring a sense of stability to the market at the lower end of the price range. It is still uncertain if current buyer support is deep enough to hold prices higher through most of the session. This could allow for additional selling activity to sweep through the complex later in the day. The cash index for March 28 is listed at $136.21 down $0.02. Open interest Monday added 568 positions (56,510).

LEAN HOGS:

Open: Steady to $1 lower. Light follow-through pressure is expected to early Tuesday morning. The overall lack of support in the complex following limit losses Monday is likely to create some pressure as trades still are uncertain to the overall long-term impact of tariffs being imposed by China. Light to moderate short-covering is likely, but the overall tone of the market remains extremely weak, potentially allowing pressure later in the session. Cash hog trade Tuesday is expected 50 cents to $2 lower. Most bids are $1 per cwt lower. Open interest Monday added 520 positions (235,006). Spot month April fell 541 in positions (21,317) and June added 247 positions (97,611). The cash lean index for March 28 is $59.06, down 0.79. DTN projected slaughter for Tuesday is expected to be 465,000 head. Saturday runs are currently estimated at 150,000 head.

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

(SK)

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Rick Kment