DTN Before The Bell-Livestock

GENERAL COMMENTS

Early follow-through pressure is quickly developing through lean hog trade Wednesday morning following sharp limit losses Tuesday. Cattle trade remains under light to moderate pressure as trades seem weary focusing on expected seasonal demand with no additional market developments seen. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 2 points higher with Nasdaq up 16 points.

LIVE CATTLE:

Open: Steady to 50 cents lower. Sluggish trade has redeveloped Wednesday morning following the underlying pressure seen early in the week. There continues to be an effort to erode buyer activity over the near future, although markets remain range bound and likely will have difficulty breaking through support levels anytime soon. There is expected to be additional underlying activity through the entire complex as traders focus on developing cash market activity and daily and weekly moves in beef values. Trade through most of the morning is expected sluggish with limited movement likely. Cash cattle activity is expected sluggish early Wednesday morning with bids expected to redevelop through the day. The few bids seen Tuesday are expected to spark additional interest from packers at $124 live and $203 dressed, but with asking prices still hard to fully pin down, both sides may find it hard to come to terms with a deal until later in the week. A wide move in futures trade, or continued pressure in beef values could bring midweek trade into the picture following light to moderate trade developing on Wednesday's the last two weeks. Open interest Tuesday added 1,373 positions (443,789). Spot month April contracts lost 1,003 positions (23,376) and June contracts fell 1,626 positions (198,252). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Open: 30 to 50 cents lower. Light to moderate pressure is developing in feeder cattle trade as pressure is seen in all contracts. Trade volume remains sluggish, allowing for limited additional trade activity. The early bounce higher in grain trade has added to the underlying concerns of pressure in cattle markets. Despite the moderate shift lower over the past two days, contracts remain well within the wide sideways market range seen over the past couple of months. Traders seem to have very little incentive to test these boundary limits over the near future given stability in fundamental markets and overall lack of direction. Cash index for 4/8 is $143.50 up $0.20. Open interest Tuesday added 760 positions (49,977).

LEAN HOGS:

Open: Steady to $2 lower. Active pressure is quickly moving back into the complex with initial pressure seen $1.50 to $2 per cwt lower in the first few minutes of trade. The overall lack of support in the complex continues to bring additional concerns to traders who appear to be questioning if and when active buying may start to develop from China. With essentially no new developments coming out of recent talks surrounding trade deals, traders seem to be less inclined to continue to push prices higher with no evidence of fundamental support and actual buying activity. Cash hog trade is called 50 cents lower to $1.00 higher. Most bids are expected steady to weak. Open interest added 998 positions (288,268). April fell 504 positions (13,748) and June fell 76 positions (82,012). Cash lean index for 4/8 is $78.89 up $0.21. DTN projected slaughter for Wednesday is 477,000 head. Saturday runs are expected at 52,000 head.

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

(BAS)

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