DTN Before The Bell-Livestock

GENERAL COMMENTS

Cattle futures have opened mixed to mostly higher Monday morning as traders open the book on a new month and quarter. This allowed for increased market direction to develop as firm gains are seen in June and August futures during initial trade. Lean hog futures remain under continued pressure with triple-digit losses seen in most contracts. Although volume remains sluggish, the weaker tone seen over the last several days is continuing to erode previous support. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 181 points higher with Nasdaq up 75 points.

LIVE CATTLE:

Open: Steady to 50 cents higher. Firm gains have slowly trickled into live cattle trade early Monday morning as traders which quickly adjusted prices lower through the end of March appear to be willing to quickly step back into the complex. June through October contracts are leading the complex higher with gains of 30 to 50 cents, as traders focus on underlying demand support expected through the next couple of months. Following a long cold winter, the potential to spark additional travel and grilling demand for beef is helping to support the potential to move markets higher early in the week. Traders will closely focus on outside market moves, as well as daily shifts in beef values. Most traders are unwilling to get too far out of line with the moves in beef markets through early spring. Cash cattle interest should remain quiet Monday with typical show-list distribution and inventory taking seen through the day. Given the expected lighter trade last week, overall show lists should be generally larger in most areas. Inventory taking will be seen by packers, which could shift the tone of the cash market as April contracts will start to be due for delivery, which should limit the need to aggressive focus on cash trade early in the month. Open interest Friday fell 4,230 positions (439,675). Spot-month April contracts lost 2,452 positions (42,296) and June contracts slipped 2,250 positions (201,495). DTN projected slaughter for Monday is 117,000 head.

FEEDER CATTLE:

Open: Mixed. Initial support in most feeder cattle trade is focusing on firm gains in live cattle trade. This overall support through the complex continues to add increased buyer activity to the market based on the potential for buyers to quickly step back into the market during early April. The market pressure seen over the last week seemingly ignored fundamental support, which remains generally strong through late-spring and early-summer months. With April futures now officially taking over as front month futures contracts, some limited pressure may develop through the complex as traders adjust positions. Cash index for 3/28 is $141.74 down $0.61. Open interest Friday lost 581 positions (53,219).

LEAN HOGS:

Open: $1 Lower. Firm follow through pressure continues to develop in lean hog futures trade early Monday. Most contracts are $1 to $1.20 per cwt lower in the opening minutes of trade as underlying concerns surrounding the ability to move additional pork to domestic and export markets is uncertain. With the latest rounds of trade talks in China last week deemed "positive" without specifics of what a trade agreement will look like, or when such an agreement would be reached, traders are starting to quickly back away from the support seen in March. Even though prices continue to post strong losses, current market levels are still $13 to $17 per cwt above support levels due to the rally during early March. This could allow prices to still quickly erode without triggering any sense of technical shift. Cash hog trade is $2 lower to $1 higher. Most bids are expected steady to weak early Monday morning. Open interest fell 491 positions (283,222). April fell 1,493 positions (23,488) and June fell 526 positions (83,465). Cash lean index for 3/28 is $73.87 up $2.15. DTN projected slaughter for Monday is 477,000 head.

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

(BAS)

Copyright 2019 DTN/The Progressive Farmer. All rights reserved.