DTN Before The Bell-Livestock

GENERAL COMMENTS

Initial trade remains mixed across the complex with more aggressive market swings in lean hog trade separating nearby and deferred market direction. Cattle futures are contained in a narrow trading range as early-week support continues to slowly trickle into the complex. Corn markets are lower in light early trade. Stock markets are mixed. Dow Jones is 54 points lower with Nasdaq up 18 points.

LIVE CATTLE:

Open: Mixed. Limited trade entered the live cattle complex early Wednesday morning with prices hovering from 25 cents lower to 15 cents higher. A mix between early morning position covering and follow through buying is slowly developing across the complex. The underlying tone in the complex continues to firm, allowing for increased expectations of additional price support through the session. Cash cattle activity remains sluggish with asking prices expected to redevelop at $130 live and $208 dressed. Bids are unavailable, but likely to slowly be seen through the day. Open interest Tuesday gained 5,242 positions (448,899). Spot month April contracts lost 1,284 positions (12,211) and June contracts adding 1,238 positions (196,931). DTN projected slaughter for Wednesday is 118,000 head.

FEEDER CATTLE:

Open: Mixed. Lack of trade activity early Wednesday is leaving prices mixed once again in a narrow range. Prices are hovering from 20 cents lower to 15 cents higher in early trade, although the firming tone of live cattle trade and outside market direction could help to spark additional buyer interest later in the session. This may add even more uncertainty to the complex through the rest of the week as overall volume is likely to remain subdued ahead of the Easter holiday. Even though feeder cattle placements are expected to show moderate gains in the cattle on feed report, this is yet to significantly affect futures trade. Cash index for 4/15 is $142.99 up $0.21. Open interest Tuesday added 938 positions (54,183).

LEAN HOGS:

Open: Mixed. Firm underlying support is once again moving into deferred lean hog trade. The announcement by the Chinese Bureau of Statistics Wednesday, that hog numbers have fallen 40 million head from year ago is gaining additional market attention. The validity of the numbers are uncertain, but the overall focus on continued price support expectations is helping to spark some underlying long-term buying. The concern comes as nearby futures are under light to moderate pressure as market fundamentals have yet to be fully impacted by this move. This is creating mixed messages, with traders remaining cautious on nearby trade following the aggressive price surge already developing in the complex. Cash hog trade is called steady to $1 higher. Bids are scattered within the range. Open interest added 59 positions (301,724). June fell 412 positions (82,356) and July added 1,682 positions (36,033). Cash lean index for 4/15 is $79.83 up $0.27. DTN projected slaughter for Wednesday is 477,000 head. Saturday runs are expected at 89,000 head.

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

(BAS)

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