DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures are slowly backing away from previous aggressive buyer interest seen late last week. The underlying tone in lean hog trade continues hold, but given the aggressive moves higher without a chance to take a breath, light to moderate price corrections are likely. Cattle trade remains lightly traded in mixed to lower market shifts early Monday. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 28 points higher with Nasdaq up 39 points.

LIVE CATTLE:

Open: Steady to 30 cents lower. Sluggish activity is slowly trickling into live cattle trade with traders are replacing strong late-week gains with minimal losses in the opening minutes of trade Monday. This may add increased underlying support through the entire complex with traders looking the potential for increased softness in front month April contracts. With nearby contracts unable to test recent highs through the first week in March, the potential to hover within the current trading range may limit long term direction. Cash cattle interest is expected to remain at a standstill with inventory taking and show list distribution expected to be the main focus early in the week. Open interest Friday added 3,235 positions (436,678). Spot month April contracts lost 6,228 positions (81,976) and June contracts added 3,410 positions (183,599). DTN projected slaughter for Monday is 116,000 head.

FEEDER CATTLE:

Open: Steady to $1 lower. Firm pressure has quickly moved through feeder cattle trade early morning activity. The triple digit gains seen late last week have created some additional underlying uncertainty through the complex as traders look for increased market direction later in the week. Uncertainty surrounding overall death losses due to flooding and the impact this weather pattern will have on the overall calving crop will continue to loom over the feeder cattle market over the next several weeks or months. But very few answers will be evident over the short term. Cash index for 3/14 is $137.65 down $0.74. Open interest Friday fell 2,079 positions (52,500).

LEAN HOGS:

Open: Mixed. Light market activity is slowly trickling into the complex early Monday morning with April futures holding narrow losses, while initial moves in the rest of the complex have been steady to 90 cents higher. The spill over buyer support seen from limit gains Friday is expected to help bring some stability into the market early in the week. But there could be some additional pressure seen in nearby summer contracts as a market correction is likely given the unrestricted market shift higher over the last two weeks. Continued focus on recent purchases from China is being tempered by the uncertainty of how consistent these sales will be over the next several weeks. Cash hog trade is steady to $2 higher. Most bids are $1 higher. Open interest gained 5,456 positions (276,944). April fell 3,414 positions (39,584) and June added 255 positions (84,162). Cash lean index for 3/04 is $51.94 up $0.01. DTN projected slaughter for Monday is 463,000 head.

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

(BAS)

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