DTN Before The Bell-Livestock

Light Pressure Trickles Into Cattle Trade

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

Light pressure is slowly developing across livestock trade as cattle markets have added increased pressure to live cattle and feeder cattle trade based on strong triple-digit losses last week still creating longer-term market concerns. Hog trade is mixed as traders adjust positions early in the week. Corn markets are lower in light early trade. Stock markets are mixed. Dow Jones is 71 points lower with Nasdaq up 20 points.

LIVE CATTLE:

Open: Steady to $0.30 lower. Limited market softness is seen in the live cattle trade early Monday morning. The bearish tone of the complex seen last week has continued to develop, which may push prices lower through the week. But limited volume in the market is keeping traders on the sidelines, unwilling to actively step back into the market given the lack of market support across the entire cattle complex. Traders continue to back off of contract highs seen in late December, but the driving pressure in feeder cattle markets continues to focus on further potential losses during early January. Cash cattle markets remain quiet with limited activity likely to develop through the day. Show list distribution and inventory taking should be the agenda of both sides early in the week. Open interest Friday increased 3,493 positions (385,437). Spot month February contracts added 292 positions (129,816) and April contracts gained 751 positions (116,062). DTN projected slaughter for Monday is 120,000 head.

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FEEDER CATTLE:

Open: $0.30 to $0.60 lower. Follow-through pressure developed early Monday morning as traders continue to adjust to the recent market pressure in the entire cattle market. Softness in outside markets may add some additional underlying weakness to cattle trade as many traders are becoming nervous not only focusing on ag commodities, but the overall direction of the economy surrounding uncertain trade talks and the partial shutdown of the federal government. Cash index for 1/03 is listed at $145.60 down $0.46. Open interest Friday gained 484 positions (48,819).

LEAN HOGS:

Open: Mixed. Trade remains sluggish early Monday morning with a combination of follow through selling pressure and short covering developing in the opening minutes of trade. Traders are focusing on narrow single-digit gains in front-month futures with prices holding at $62 per cwt. This may add some additional market movement through the complex as traders look for continued strong cash market activity as packers focus on still aggressive margins. Cash hog trade is steady to $1.00 higher. Most bids are 50 cents higher. Open interest fell 165 positions (222,513). February fell 1,477 positions (79,850) and April gained 737 positions (60,865). Cash lean index for 1/03 is $53.63 up 0.38. DTN projected slaughter for Monday is 477,000 head.

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

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Rick Kment