DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong follow-through support is quickly moving into hog trade as traders continue to stick with the expectations that China buying will be seen later in the year and continue to bolster the overall complex. Cattle trade have eroded slightly in limited activity Friday. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 61 points higher with Nasdaq up 39 points.

LIVE CATTLE:

Open: 30 to 70 cents lower. Position taking swept through early trade in all livestock markets with most nearby contracts 40 to 50 cents lower in limited activity. The focus on end-of-day cash market direction and beef values will continue to influence market participation. But the strong shift higher in all contracts Thursday quickly sparked renewed bullish intentions through most of the complex, allowing for potential follow-through activity to develop, even if this buying is delayed until early next week. Cash cattle activity remains sluggish, although packer interest, especially in the North, is likely to improve significantly through the day. Given the early trade at $1 per cwt lower from week-ago levels, feeders have their work cut out for them to insist steady to higher money, even with the rebound in futures prices. Asking prices remain at $127 and higher live and $208 dressed. Open interest Thursday added 3,218 positions (444,964). Spot month April contracts lost 2,038 positions (36,357) and June contracts added 368 positions (200,733). DTN projected slaughter for Friday is 117,000 head.

FEEDER CATTLE:

Open: Mixed. Early trade in feeder cattle futures is mixed following sharp triple-digit gains Thursday. A combination of follow-through buying has been met by late-week profit taking Friday morning. The firming tone in the cattle market is expected to continue, although at this point, there may be limited activity through the rest of the session with traders focusing on outside market direction. Cash index for 4/3 is $142.88 up $0.44. Open interest Wednesday added 29 positions (49,646).

LEAN HOGS:

Open: $1 to $2 higher. Follow-through buyer support continues to flood the hog complex with early trade $1 per cwt higher in many nearby contracts. Volume at opening bell remains sluggish, as traders continue to focus on bullish underlying support based on expected trade deal progress, and the overall expectation that China will fill part of its pork needs with U.S. exports. Even though no sales were reported to China in the last two weeks of export sales, buyers have not missed a beat, as they expect long term buying to be seen through the complex and seem not to be caught up in the short-term direction of actual sales. In some ways this is a generally safe bet, that China will be buying increased pork product. But the more time seen between active sales or shipments means that the market may be disappointed following all of the buildup. Cash hog trade is called $1 lower to $1.50 higher. Most bids are expected steady Friday morning. Open interest added 2,921 positions (285,194). April fell 532 positions (18,797) and June gained 532 positions (82,486). Cash lean index for 4/3 is $78.26 up $0.56. DTN projected slaughter for Friday is 420,000 head. Saturday runs are expected at 145,000 head.

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

(BAS)

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