DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm underlying pressure is seen in livestock trade with the most active losses developing in live cattle and feeder cattle futures. Narrow pressure in lean hog futures appear to be allowing for potential buyer interest to move back into the complex based on previous market pressure and lack of price losses early Wednesday morning. Corn markets are lower in light early trade. Stock markets are lower. Dow Jones is 38 points lower with Nasdaq down 4 points.

LIVE CATTLE:

Open: Steady to 90 cents lower. Pressure in deferred live cattle trade is causing moderate to firm losses through the entire complex as traders look for increased underlying support to develop across the market. There is growing uncertainty surrounding the ability to bring additional buyer interest back into the complex given the recent softness in beef values and general market apathy following the Easter holiday. June futures still remain within the wide sideways trading range, but a dip below $120 per cwt would likely spur additional liquidation through the entire complex. Cash cattle activity is likely to see more interest as the morning develops. There are currently no bids seen in any areas of cattle country, although packers may start to float initial bids sometime through the day. Asking prices are still not active in some areas, but cattle are priced at $130 live and $212 dressed where asking prices are available. There could be some midweek development of cash trade by the end of the day Wednesday given the trend for early week activity over the last few weeks. But the majority of trade is likely to be pushed off until later in the week. Open interest Tuesday added 2,062 positions (451,696). Spot month April contracts lost 1,194 positions (5,573) and June contracts slipped 1,067 positions (190,729). DTN projected slaughter for Wednesday is 122,000 head.

FEEDER CATTLE:

Open: Steady to 80 cents lower. Moderate to firm pressure is developing through the entire complex with May feeder cattle trade leading the complex lower. Although more focus has moved to the August and September contracts, the swift shift lower through the morning is eroding early-week stability that started to trickle into the complex. Cash index for 4/22 is $145.84 down $0.13. Open interest Tuesday fell 1,956 positions (53,430).

LEAN HOGS:

Open: Steady to 50 cents Lower. Firm underlying pressure is moving into lean hog trade once again as traders continue to back away from previous support. The underlying activity across the entire complex has continued to add increased uncertainty to the entire market. All eyes are still on China and their expected need for increased pork supplies. But there is still more questions than answers concerning the amount of pork that will be purchased by China and how regular of a participant they will be in the pork market. Limited pressure through early morning trade may allow for moderate to firm buyer to redevelop as selling interest runs out of gas. Cash hog trade is called steady to $1 higher. Most bids are steady to firm. Open interest added 2,500 positions (308,798). June fell 2,340 positions (79,618) and July added 1,818 positions (39,981). Cash lean index for 4/22 is $82.07 up $0.53. DTN projected slaughter for Wednesday is 477,000 head. Saturday runs are expected at 141,000 head.

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

(BAS)

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