DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures are lightly traded early Thursday morning with increased underlying weakness slowly trickling into deferred cattle futures. Despite active sales of pork to China, lean hog futures have opened mixed to mostly lower. This could continue to erode earlier market support through the entire pork complex. Corn markets are steady to lower in light early trade. Stock markets are higher. Dow Jones is 115 points higher with Nasdaq up 2 points.

LIVE CATTLE:

Open: Mixed. Early trade in live cattle futures seems to have become accustomed to minimal price shifts as traders look for increased end-of-week adjustments without showing any significant change in direction. Nearby gains are holding narrow gains, while late-week pressure is developing as traders square positions ahead of the long weekend. Markets will remain closed Friday due to Good Friday. This may add even more uncertainty to the complex as trades will have an additional day to process and assess cattle on feed report numbers before getting a chance to trade these numbers. Cash cattle interest is expected to improve through the day following trade in the South on Wednesday. It is likely that most if not all of the needed purchases in the south may be done for the week given light to moderate activity at $126 per cwt. Prices were $2 per cwt higher, and seem to be setting the tone for potential activity in the North through the end of the week. Bids are expected to redevelop near $126 to $127 per cwt with asking prices still firm at $127 and higher and $208 or higher early Thursday. Both sides would rather finish trade by the end of the day, especially with no futures market direction Friday due to Good Friday. Open interest Wednesday gained 1,504 positions (450,187). Spot-month April contracts lost 2,452 positions (9,759) and June contracts slipped 507 positions (196,342). DTN projected slaughter for Thursday is 120,000 head.

FEEDER CATTLE:

Open: Mixed. Narrow price ranges are seen through the entire complex with traders holding markets from 20 cents lower to 15 cents higher. Limited activity is expected through the entire session as traders seem to have already exited the market ahead of the long weekend. With April 1st cattle on feed report being released after markets close Thursday afternoon, there is expected to be some additional light market positioning in front of the report. A moderate gain in placement is estimated to be seen, but if reported numbers of cattle moving to feed yards is within the market range, the reaction to the report is likely to be minimal early next week. Cash index for 4/16 is $143.58 up $0.12. Open interest Wednesday added 798 positions (54,977).

LEAN HOGS:

Open: Mixed. Light to moderate gains are seen in lean hog trade despite confirmation that additional sales were reported to China over the last week. Another 23,500 metric tons of pork were sold in the weekly export sale report. Shipments were reported at 4,500 mt in the report. This totaled over 100,000 mt of pork sold to China in the last two weeks. Still the markets reaction to this news was lukewarm at best with prices initially posting limited gains, but slipping quickly during early trade. The market has clearly factored in aggressive continued buying into futures prices, and it appears that there is becoming more potential for market erosion over the near future than any additional premium being put into the complex. Cash hog trade is called steady to $1 higher. Bids are scattered within the range. Open interest fell 631 positions (300,025). June fell 631 positions (81,200) and July added 664 positions (36,538). Cash lean index for 4/16 is $80.24 up $0.40. DTN projected slaughter for Thursday is 477,000 head. Friday schedules are expected at 448,000 head with Saturday runs are expected at 89,000 head.

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

(BAS)

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