DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong losses have quickly developed in cattle trade early Monday as traders react to the bearish cattle on feed report seen Friday. This adds even more softness to the complex which has been able to gain firm support through much of January. Hog futures are mixed with firm nearby gains leading the overall tone of the complex Monday. Corn markets are trading lower in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 103 points lower while Nasdaq is down 64 points.

LIVE CATTLE:

Opening call: $1 to $2 Lower. Sharp losses have quickly developed through the entire live cattle complex with triple-digit losses seen in all markets. This may continue to drive additional pressure into the complex as April and June futures are holding losses over $2 per cwt during early trade. The focus on outside markets and the potential to still move active beef supplies may continue to leave markets in the current range over the near future. Cash cattle markets are quiet early Monday morning with the typical early week routine the main and likely only order of business for the complex. There is likely to be some additional pressure in the complex early in the week focusing on futures trade. This may further delay bids from developing. Open interest Friday added 2,019 positions (353,915). Spot February liquidated 3,067 positions (41,953) and April contracts added 1,879 positions (150,903). DTN projected slaughter for Monday is 114,000 head.

FEEDER CATTLE:

Opening call: $2 to $3 lower. Larger than expected cattle placements in the cattle on feed report seen Friday is leading to sharp market pullbacks in all cattle futures. The feeder cattle complex is leading the market lower as traders focus on increased cattle numbers and the potential that the tight supply situation may not be as supportive to price heading into the spring as many had thought. Cash lean index for 1/26 is $131.71, up $0.09. Open interest Friday fell 429 position (51,685).

LEAN HOGS:

Opening call: Mixed. Light to moderate support is expected to hold through early trade which continues to draw increased buyer support back into nearby contracts. February futures are holding a gain of 50 cents per cwt in the early minutes of trade, while the rest of the complex is limited to a much tighter trading range as deferred futures are slightly lower following the strong triple-digit rally Friday. This could leave markets in light trade through most of the morning. Cash bids are steady to $1.00 higher with most bids steady to firm. Open interest Friday added 268 positions (216,208). Spot month February liquidated 1,825 positions (24,815) and April added 1,062 positions (93,496). Cash lean index for 1/26 is $68.30, up $0.19. DTN projected slaughter for Monday is 440,000 head.

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

(SK)

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