DTN Before The Bell-Livestock

GENERAL COMMENTS

Pressure developed in all livestock trade early Wednesday morning as traders continue to focus on a renewed pullback in lean hog trade. Any momentum based on pork movement to China seem to be lost in traders refocusing on domestic production levels that are expected to continue to increase through the summer months. Cattle trade is under light pressure with limited volume keeping losses to a minimum through the morning. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 26 points higher with Nasdaq up 3 points.

LIVE CATTLE:

Open: Steady to 40 cents lower. Narrow losses have trickled into the complex, allowing increased market softness to redevelop through the entire complex. This may add even more softness to the market, as traders test short-term support levels set during early March. The inability to break through resistance levels of $130 pe cwt once again has continued to create physiological pressure on the entire complex, as traders steadily back away from the complex despite fundamental support. Cash market interest is starting to slowly improve, although at this point it is still likely trade will be pushed to the last half of the week. A few token bids are seen in the South at $125 through Texas, while initial asking prices are starting to be seen from $130 live to $210 dressed basis. Open interest Tuesday added 740 positions (450,201). Spot month April contracts lost 2,756 positions (53,429) and June contracts added 152 positions (204,681). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Open: Steady to 50 cents lower. Limited pressure is once again seen through the feeder cattle trade Wednesday morning. Even though more actual numbers are starting to develop concerning cattle lost in recent floods and winter blizzards, the market seems to have already have this factored in given the emotional buying support seen last week. Traders are still focusing on the potential that overall cattle numbers may continue to increase through the spring and summer months, allowing for follow through pressure in live cattle and feeder cattle trade. Despite the strong triple-digit pressure developing through the week, the feeder cattle complex still remains will within the wide trading range as traders look for opportunities to take profits after the aggressive market surge higher. Cash index for 3/25 is $142.04 up $0.24. Open interest Tuesday added 124 positions (53,746).

LEAN HOGS:

Open: Steady to $1 lower. Initial pressure quickly and aggressively moved into lean hog trade with summer contracts following the weaker shift seen Tuesday as increased selling activity quickly moved into May through August futures trade. This overall lack of support in the complex is a far cry from markets returning to the pre-rally days. But the lack of new market direction concerning opening export markets or trade deals with China left overall sluggish market direction through the entire complex. A moderate to strong price correction is not unexpected, but this is also likely to erode fundamental support that has built over the last couple of weeks. Cash hog trade is steady to $2 higher. Bids midweek are scattered through the range. Open interest added 2,079 positions (285,115). April fell 320 positions (28,184) and June added 338 positions (84,430). Cash lean index for 3/25 is $67.13 up $2.16. DTN projected slaughter for Wednesday is 477,000 head. Saturday runs are expected at 146,000 head.

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

(BAS)

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