DTN Before The Bell-Livestock

GENERAL COMMENTS

Follow-through losses have continued to develop in cattle trade Friday morning following moderate to strong losses that have developed in all January trading sessions. Traders are quickly pulling back from support seen in December, although fundamental demand has not changed significantly. Hog futures are slightly higher as traders attempt to adjust positions after the strong rally. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 460 points higher with Nasdaq up 144 points.

LIVE CATTLE:

Open: Steady to $0.50 lower. Firm pressure is seen in live cattle trade following additional pressure which is developing in feeder cattle trade. With feeder cattle markets showing evidence of possible triple-digit losses once again, the overall lack of support in the complex continues to sweep through live cattle markets. There is likely to be some additional market volatility through the end of the week in all cattle trade with uniform losses seen in live cattle markets. Cash cattle activity Friday morning remains sluggish following light to moderate trade which was seen in the South and parts of Nebraska Thursday. Prices were listed at $123 per cwt live basis, fully steady with last weeks. Dressed trade in the North is undeveloped with asking prices at $200 per cwt, as trade will likely develop through the day. Open interest Wednesday increased 4,107 positions (380,252). Spot month February contracts lost 3,087 positions (131,054) and April contracts gained 2,820 positions (114,040). DTN projected slaughter for Thursday is 120,000 head.

FEEDER CATTLE:

Open: $0.60 to $0.90 lower. Strong pressure has continued to move into feeder cattle futures with traders still backing away from gains that developed at the end December. The latest round of pressure has pushed front month January futures to $145.67 per cwt, which is only 10 cents above initial support levels set on December 14. A move below these price levels is expected to bring additional technical pressure in the feeder cattle complex over the next few trading sessions. Cash index for 1/02 is listed at $146.06 up $1.56. Open interest Thursday gained 106 positions (48,345).

LEAN HOGS:

Open: Steady to $0.20 Higher. Limited follow through support is trickling into the lean hog complex early Friday morning with very little direction developing at the end of the week. A mix between follow-through buying and position taking following the strong market surge seen over the last week is leaving prices stable with traders unwilling to actively step back into the market. The focus on continued strong packer margins is helping to elevate cash hog values in order to sustain aggressive processing schedules. This is likely to keep futures trade supportive through the end of the week. Cash hog trade is steady to $1.50 higher. Most bids are 50 cents higher. Open interest added 3,265 positions (222,750). February fell 331 positions (81,341) and April gained 1,449 positions (60,154). Cash lean index for 1/02 is $53.25 up 0.20. DTN projected slaughter for Friday is 475,000 head. Saturday runs are expected at 422,000 head.

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

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