DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm gains moved into lean hog and live cattle trade early Friday morning as traders quickly focused on a new month and looked toward spring. The ability for April live cattle futures to break through 2018 highs is rekindling buyer support through the complex. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 173 points higher with Nasdaq up 46 points.

LIVE CATTLE:

Open: Steady to 50 cents higher. Buying quickly moved into live cattle trade early Friday as traders shook off end of month losses seen Thursday. This pushed April futures to new contract highs and broke through long-term resistance levels of $130.10 per cwt set in February 2018. Although buyer support remains sluggish at these new levels, the expectation of firming fundamental support is likely to sustain limited trade through the end of the week. Cash cattle trade may once again be pushed to the end of the day with a few bids redeveloping in the same range as seen earlier in the week. Bids are at $125 live and $202 dressed, unlikely to get any attention until late Friday. Bids are holding firm at this point. Open interest Thursday added 6,722 positions (413,788). Spot month February contracts lost 381 positions (11) and April contracts added 578 positions (155,922). DTN projected slaughter for Friday is 115,000 head.

FEEDER CATTLE:

Open: Mixed. Strong support quickly moving into live cattle trade has helped to ease some of the uncertainty in feeder cattle trade. This allowed for moderate gains to move into nearby contracts, while limited follow-through pressure is seen in deferred activity. The direction of live cattle trade as well as end of the week moves in outside markets will likely be a deciding factor if early buyer support remains. Cash index for 2/27 is $139.94 down $0.52. Open interest Thursday gained 1,009 positions (52,340).

LEAN HOGS:

Open: Steady to $1 higher. Limited follow-through buying support is seen early Friday morning. With traders moving into March, there seems to be some renewed expectations of firm buyer support developing across the entire hog complex. February lean hog futures were characterized by aggressive losses, which accounted for a $10 per cwt loss in April futures. With the month of February now in the books, traders are focusing on potential demand support coming from domestic and export movements. This may still be slow to develop, but for now, traders are focusing on market lows potentially being in February. Cash hog trade is steady to $1.00 lower. Most bids are steady to 50 cents lower. Open interest gained 4,811 positions (257,728). April added 531 positions (104,736) and June added 1,122 positions (46,905). Cash lean index for 2/27 is $52.64 down $0.16. DTN projected slaughter for Friday is 470,000 head. Saturday runs are expected at 193,000 head.

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

(BAS)

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