DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock markets are mixed with cattle trade holding limited price support. The main focus has returned to nearby lean hog futures trade with aggressive losses holding in April futures, moving prices nearly $2 per cwt lower. This could evaporate any sense of support seen over the last couple of trading sessions. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 167 points higher with Nasdaq up 59 points.

LIVE CATTLE:

Open: Mixed. Very limited activity has developed early Monday morning with markets nearly stable in nearby contracts. Single-digit pressure is seen in lightly traded February futures, while light support has trickled into the rest of the complex. Traders seemed to look past the dated nature of the cattle on feed report released Friday afternoon, as well as the delayed cold storage report. As encouraging as it was for some to have numbers available again, the fact that these numbers were nearly 2 months old has little to no market value given the volatility in the complex through the last couple of months. Cash cattle markets are slow to develop following limited trade last week. Bids and asking prices are undeveloped with the focus on show list distribution and inventory taking. It is uncertain if packers will try to step into the market and make some early week sales to make up for what was not bought last week. Open interest Friday added 3,598 positions (400,236). Spot month February contracts lost 860 positions (3,378) and April contracts fell 1,392 positions (158,850). DTN projected slaughter for Monday is 112,000 head.

FEEDER CATTLE:

Open: Mixed. Trade is seen mixed to mostly higher with March futures holding narrow single-digit losses. The rest of the complex has posted narrow gains from 20 to 40 cents per cwt. The January cattle on feed report which accounted for cattle placements through the month of December, posted a 2% lower placement level than December 2017. This seems to be creating some minor support to deferred contracts, although traders are putting limited emphasis on these numbers due to the historical nature of the report. Cash index for 2/21 is $141.31 up $0.20. Open interest Friday gained 285 positions (50,686).

LEAN HOGS:

Open: Mixed. Sharp pressure is quickly redeveloping in nearby contracts with traders still focusing on the extremely weak fundamentals plaguing spring and summer production levels. This has pushed April futures nearly $2 per cwt lower in the opening minutes of trade, while the direction seems to be limited to April through August contracts months. Deferred futures are trying to focus on market stability with narrow gains seen in the complex. But this is causing limited interest with most traders focusing on spot month contracts sliding back toward long-term support levels. Cash hog trade is steady to $1.00 lower. Most bids are expected 50 cents lower. Open interest gained 3,618 positions (245,406). April added 441 positions (103,571) and June added 1,373 positions (44,749). Cash lean index for 2/21 is $53.65 down $0.41. DTN projected slaughter for Monday is 435,000 head but uncertain based on weather conditions.

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

(BAS)

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