DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong pressure quickly swept through cattle trade as feeder cattle futures have quickly moved through short-term support levels, which is sparking additional selling activity. Hog markets have tried to show some increased stability following aggressive losses Wednesday. Corn markets are higher in light early trade. Stock markets are mixed. Dow Jones is 29 points lower with Nasdaq up 11 points.

LIVE CATTLE:

Open: Steady to $1 lower. Swift pressure has quickly swept through live cattle trade as traders react to the technical shift lower in feeder cattle trade through the morning. The ability to regain strong market support in nearby contracts late Wednesday has added to the market pullback with nearby contracts 70 to 90 cents lower in the opening minutes of trade. Unlike feeder cattle futures, live cattle markets are trading at the top end of the trading range, which is likely to spark additional stability in live cattle contracts. Cash cattle interest remains sluggish with asking prices being restated steady to firm from levels which developed midweek. Asking prices are seen at $128 and higher live basis and $203 and higher dressed. Even though packer interest is expected to improve through the day, it is likely that trade could be pushed off until Friday. Open interest Wednesday gained 745 positions (389,055). Spot-month February contracts slipped 4,313 positions (67,464) and April contracts added 3,175 positions (150,764). DTN projected slaughter for Thursday is 119,000 head.

FEEDER CATTLE:

Open: $1 to $1.50 lower. Sharp losses have moved into nearby feeder cattle futures Thursday morning. Morning losses have pushed through November support levels of $43.72 per cwt, which has sparked widespread losses through the entire complex. It is still undetermined just how much volume will move into the complex as prices search for support near these price levels, but the weaker tone in the feeder cattle complex is expected to have a significant impact in live cattle trade through the end of the month. Cash index for 1/15 is listed at $144.19, down $0.24. Open interest Wednesday slipped 213 positions (50,506).

LEAN HOGS:

Open: Steady to $0.50 lower. Light follow-through pressure is trickling into the lean hog complex, although similar to trade levels seen Wednesday, market activity and volume is subdued as traders are looking for longer-term direction. Even though prices shifted sharply lower in nearby trade midweek, the limited amount of open interest changes may minimize the impact of this latest round of losses. The potential for short-covering moving into the market may allow for some needed market stability in nearby contracts. Cash hog trade is steady to $1 lower. Most bids are steady. Open interest added 851 positions (204,660). February fell 56 positions (36,250) and April added 728 positions (76,343). Cash lean index for 1/15 is $58.02, up 0.37. DTN projected slaughter for Thursday is 474,000 head. Saturday runs are shaping up to be 153,000 head.

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

(BAS)

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