DTN Before The Bell-Livestock

GENERAL COMMENTS

Sharp triple-digit gains have quickly moved back into lean hog trade. This allowed for increased underlying support across the entire complex as volatile market swings may continue to develop through much of the week. Cattle trade is firming following mixed moves at opening bell. Corn markets are lower in light early trade. Stock markets are lower. Dow Jones is 113 points lower with Nasdaq down 16 points.

LIVE CATTLE:

Open: Mixed. Moderate gains in nearby trade has focused on pushing April through August contracts 45 to 55 cents higher in initial trade. This allows for limited direction through the complex as traders may focus on increased volume and market support later in the session. Traders have growing expectations that increased trade may develop over the next couple of weeks, which may rekindle beef values and solidify support levels. Production levels appear to be getting back to normal with more moderate temperatures seen in most areas and flooding concerns starting to ease in areas hit over the last couple of weeks. There still is expected to remain additional production challenges through the wet spring, but for now, it appears that producers are able to focus on the upcoming spring season. Cash cattle activity remains undeveloped with bids and asking prices still unavailable and likely may remain that way until midweek or later. This could add some additional underlying uncertainty to the entire cattle complex. Even though packers have increased contracts delivered through early April, but focus on short bought market status is starting to limit overall chain speeds early in the week. It is uncertain if this will spark early market interest or if both sides will hold out until late in the week as is typically seen. Open interest Monday fell 795 positions (438,439). Spot month April contracts lost 2,043 positions (40,043) and June contracts slipped 780 positions (200,640). DTN projected slaughter for Tuesday is 116,000 head.

FEEDER CATTLE:

Open: Mixed. Early-morning buying has helped to stimulate additional nearby contract support as traders refocus efforts on short-term demand and the ability to regain market support through the month of April. Feeder cattle traders continue to remain split between the moves in the grain and outside markets, and developments in live cattle trade. As corn and soybean markets are holding light to moderate pressure Tuesday morning, the focus on lower production costs is helping to stimulate moderate support, but choppy market moves in live cattle trade has limited overall consistency through the first few minutes of trade with nearby gains offset by pressure in late 2019 contract months. Limited volume is expected through most of the morning, potentially allowing to keep traders focused on surrounding market moves. Cash index for 3/29 is $142.42 up $0.68. Open interest Monday lost 1,485 positions (51,306).

LEAN HOGS:

Open: $1 to $2 higher. Strong early-buyer support quickly and aggressively moved into all lean hog futures with April futures holding a $1.85 per cwt rally. The underlying support is firm, although it is still uncertain just how deep buyer support remains, given the volatile market shifts through the last several days. The potential for longer-term pork demand increasing in domestic markets, and potential export activity over the next couple of months is helping to stimulate buyer support. At this point, traders have nothing but long lasting rumors and potential hope surrounding the need for China to meet pork demand through other countries production due to African swine fever. There are still very sketchy details about the overall impact of swine fever in China and in what stage producers in the country are in repopulating the herd. Cash hog trade is called steady to 50 cents lower. Most bids are expected steady to weak early Tuesday morning. Open interest fell 2,873 positions (279,945). April fell 1,229 positions (22,167) and June fell 1,765 positions (81,694). Cash lean index for 3/29 is $75.80 up $1.93. DTN projected slaughter for Tuesday 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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