DTN Before The Bell-Livestock

Renewed Support Seen in Cattle Trade

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

Strong buyer support has quickly flooded into cattle trade with the overall gains helping to solidify interest in live cattle and feeder cattle markets. There still remains a lot of uncertainty surrounding outside markets and demand from export markets, but for now, traders are stepping into the market following strong losses last Friday. Hog futures are mixed to mostly higher as volume remains sluggish early Monday morning. Corn prices are higher in light trade. Stock markets are higher, Dow Jones is 167 points higher while Nasdaq is up 78 points.

LIVE CATTLE:

Open: $1 to $1.50 higher. Triple-digit gains have quickly and aggressively developed across live cattle trade. This is helping to bring some underlying support back to the complex which may add increased trade interest to the market. There is likely to be some additional follow through buying seen through the rest of the morning. June live cattle futures have rallied over $4 per cwt above week ago lows, and this is helping to solidify buyer activity into the market. There is still likely to be a lot of noise in the market over the coming weeks, but if traders can defend recent support levels, buyer activity may slowly return to the complex. Cash cattle activity remains undeveloped Monday with the normal early week inventory taking and show list distribution taking place. The overall sluggish trade last week is leaving packers in short bought situations, but it is undetermined if this will force trade to develop earlier in the week than normal. Open interest Friday liquidated 8,931 positions (347,247). Spot month April contracts lost 9,576 positions (18,811) and June contracts fell 1,532 positions (157,978). DTN projected slaughter for Monday is 115,000 head.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

FEEDER CATTLE:

Open: $1 to $2 higher. Strong initial support helped to push prices more than $2 per cwt higher in opening trade activity. With traders trying to establish some early week market support, the tumble lower seen at the end of the week last week is not only allowing for some great short covering opportunities, but also a chance for buyers to step back into the market quickly if prices continue to rally. Firm support is expected through most of the morning as live cattle buyer interest is helping to solidify the entire cattle market. Cash index for 4/5 is listed at $135.41 up 0.10. Open interest Friday fell 1,060 positions (49,780).

LEAN HOGS:

Open: Mixed. Initial trade Monday morning is trading mixed to mostly higher with light buyer support returning to the complex. The intensity of the market remains extremely sluggish with traders focusing on the inability to draw additional support to the complex following continued pressure over the last month. But if traders can help to add stability to the market early in the week, commercial buyers may step back into the complex. Cash hog trade Monday is expected steady cents to $1 lower. Most bids are expected to be steady. Open interest Friday added 1,329 positions (241,677). Spot month April fell 1,581 in positions (14,822) and June added 957 positions (102,769). Cash lean index for 4/5 is $54.75, down 0.52. DTN projected slaughter for Monday is expected to be 460,000 head.

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

(SK)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Rick Kment