DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm gains in the cattle complex have developed in the opening minutes of trade. There continues to be questions about the depth of buyer support as traders seem to be unable to hold support through the long term over the past couple of days. Traders will closely watch not only the outside markets, but early week moves in fundamental trade in both cattle and hog futures. Corn prices are lower in light trade. Stock markets are higher, Dow Jones is 245 points higher while Nasdaq is up 78 points.

LIVE CATTLE:

Open: 40 cents to $1.20 higher. Firm early session buyer support has quickly moved into the market once again. The concern that trade support has been strong early in the session over the last couple trading days, but unable to hold that support is creating some uncertainty through the entire complex. This may add even more market volatility into nearby and deferred live cattle trade. Cash cattle interest remains quiet with bids and asking prices undeveloped early Tuesday morning. It is likely that active trade will be pushed off to the end of the week even though packers entered the week short bought once again. A few token bids may start to develop through the day, although unless a major shift is seen in futures prices, most trade is likely to wait until later in the week. Open interest Monday fell 588 positions (344,855). Spot month April contracts lost 1,310 positions (11,923) and June contracts fell 840 positions (153,203). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: 50 to 80 cents higher. Light buyer interest is slowly moving into the live cattle futures complex with narrow gains holding in the opening minutes of trade. The inability for the cattle complex to hold the strong support seen early Monday through the rest of the session created some market uncertainty in all contracts. This may add some additional concerns about the ability to move prices higher through the next couple weeks. April futures continue to hover near $140 per cwt, although the overall lack of direction in the market may add some choppy market shifts through the rest of the week. Outside market shifts will also be closely followed through the next couple days as the direction of the grain complex continues to have a significant impact on trader interest. Cash index for 4/13 is listed at $137.59 up 1.17. Open interest Monday fell 246 positions (50,695).

LEAN HOGS:

Open: Steady to 30 cents lower. Light follow-through pressure is slowly and carefully moving into the lean hog complex. The significant premium in futures trade to the cash complex following the expiration of April contracts is adding even more pressure to the market. This may continue to erode nearby and deferred contracts, although there is growing support in the underlying market fundamentals through late spring. This may help to draw additional longer term support back to the table after the current selling pressure slows. Cash hog trade Tuesday is steady to $2 higher. Most bids are steady. Open interest Monday added 619 positions (245,421). Spot month May fell 47 in positions (3,563) and June liquidated 1,007 positions (95,085). Cash lean index for 4/13 is $53.53, up 0.30. DTN projected slaughter for Tuesday is expected to be 465,000 head. Saturday runs are pegged at 118,000 head.

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

(SK)

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