DTN Before The Bell-Livestock

GENERAL COMMENTS

Feedlot country remains quiet this morning with preliminary bids still hard to find. Asking prices are not well defined with just a few showlists in the South offered at $122.

Significant trade volume may not surface until sometime Thursday or Friday. The cash hog trade has opened mostly steady around the circuit. The corn trade is 1-2 cents higher in the early rounds, modestly lifted by short covering in the wake of yesterday's sell-off.

Currently, the Dow is 113 points lower with the Nasdaq off by 30.

LIVE CATTLE:

Live contracts are modestly higher as of this writing, supported by short covering following Monday's aggressive sell-off.

The large premiums suggested by the most recent feedlot trade would seem to be supportive. Also we could be seeing some positioning ahead of the annual cattle inventory due out this afternoon. Open interest on Monday decreased by 676 (352,871). Spot February liquidated by 2,461 (39,435) and April lost 107 (150,651). DTN projected slaughter for today is 113,000 head.

FEEDER CATTLE:

Feeder issues as moderately higher as we move into the second hour of CME business. If feeder futures can turn attention away from deferred live contracts, some support should stem from the large premium of the cash index. On the other hand, the new herd inventory available later today should give us an idea of the feeder pool outside of feedlot as of January 1. Some analysts believe the total could be at least 5-7 percent greater than last year. Open interest on Monday decreased by 1,576 (49,753). CME cash feeder Index for 01/27: 131.20, off .51.

LEAN HOGS:

Lean hog futures are sporting solid gains this morning with nearby contracts gaining on their deferred counterparts. Bull spreading interest is evident with spot Feb rallying to converge with the cash index. Open interest on Monday increased by 121 (216,333).

Spot February liquidated by 1,229 (23,593) and April added 88 (93,581). CME cash lean index for 0l/27: 68.44, up .14. DTN projected slaughter for today is 430,000 head.

John A. Harrington can be reached at john.harrington@dtn.com

(SK)

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