DTN Before The Bell-Livestock

Firm Gains Sweep Into Cattle Markets

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

Firm gains have moved back into the cattle complex as traders continue to see underlying buyer support through the entire complex. There is growing support that may continue to develop across the complex, although traders are focusing on consistent meat demand building through the spring and summer months. Corn prices are steady to lower in light trade. Stock markets are higher, Dow Jones is 109 points lower while Nasdaq is up 41 points.

LIVE CATTLE:

Open: 50 cents to $1 higher. Strong buyer support has quickly moved back into nearby trade with June contracts leading the market higher with a $1 per cwt rally. The strong discount in June contracts to the April futures which are starting to fade near expiration is likely to create additional support over the near future. Cash cattle markets is still sluggish with bids likely to be hard to find through most of the day. Active trade may easily be pushed into the last half of the week once again with packers and feeders trying to quickly position for longer term market position through the end of the month. A few asking prices are seen at $125 in the South, although limited interest has developed from this at this point. Open interest Monday added 3 positions (346,081). Spot month April contracts lost 1,580 positions (4,892) and June contracts fell 1,306 positions (149,995). DTN projected slaughter for Tuesday is 119,000 head.

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FEEDER CATTLE:

Open: Steady to 60 cents higher. Light follow through buyer support is slowly moving into the market. The focus across the complex continues to bring additional movement to nearby contracts with May and August futures holding the most support, which is pushing prices as much as 60 cents higher in the opening minutes of trade. This may add some additional movement and support to the entire complex which posted aggressive triple-digit gains through the Monday session. Cash index for 4/20 is listed at $138.13 down 1.57. Open interest Monday lost 263 positions (48,328).

LEAN HOGS:

Open: 10 to 50 cents lower. Light early pressure has once again slowly developed in lean hog trade as the focus on the complex has recently been shifted away from market support and traders are attempting to defend previous gains. But the amount of hogs and pork available to the market has continued to be a challenge for buyers. In the latest cold storage report released Monday afternoon, total pork supplies increased 12% from year-ago levels while slightly increasing from the previous month. Pork belly inventory levels increased 188% from year-ago levels, and up 21% from last month. The overall focus on expected strong demand through the end of the year needs to continue to clear the current production levels and pork already in freezers. Cash hog trade Tuesday is 50 cents lower to 50 cents higher. Most bids are seen steady to 50 cents higher. Open interest Monday added 3,180 positions (242,751). Spot month May gained 34 positions (3,545) and June added 340 positions (93,915). Cash lean index for 4/20 is $57.88, up 1.08. DTN projected slaughter for Tuesday is expected to be 465,000 head. Saturday runs are scheduled at 53,000 head.

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

(SK)

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Rick Kment