DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm buyer support is quickly stepping into the livestock market as additional market firmness is seen in lean hog trade. The underlying support may bring strong support to nearby lean hog futures even though caution is seen in further out contract months. Cattle futures are looking for additional market firmness, even though there is expected to be some uncertainty surrounding overall buyer support. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 97 points higher while Nasdaq is up 15 points.

LIVE CATTLE:

Opening call: Mixed. The stability seen in live cattle futures Monday is expected to create additional but limited support in several nearby contracts during Tuesday morning trade. Trade volume will likely remain extremely sluggish with traders focusing on the ability to draw additional buyer support into the market following the market pressure over the last couple of weeks. Even though firm gains may develop during the morning, the complex is not immune to additional market pressure as there remains uncertainty surrounding follow through buyer interest. Cash cattle activity remains at a standstill with bids and asking prices still undefined in most areas of cattle country. Bids may not develop until possibly Wednesday or later with growing emphasis on futures trade and the ability to sustain boxed beef values. Open interest Monday added 1,727 positions (338,731). Spot February liquidated 1,848 positions (20,849) and April contracts gained 1,987 positions (147,287). DTN projected slaughter for Tuesday is 112,000 head.

FEEDER CATTLE:

Opening call: Mixed. The ability to draw light gains back into most feeder cattle contracts Monday is helping to instill additional buyer support through the entire market. Early trade is expected to remain mixed to mostly higher, although at this point there seems very little market momentum to propel prices significantly higher. Light trade volume is expected to be seen through the entire complex, allowing for market shifts to easily occur during the morning. Cash lean index for 2/3 is $127.03, down $0.21. Open interest fell 145 position (49,060).

LEAN HOGS:

Opening call: Steady to 50 cents higher. Follow through buyer support is expected to develop through the entire lean hog complex Tuesday morning as strong momentum seen Monday is expected to bring additional trade interest back to the market. Traders will remain somewhat cautious as they will closely monitor pork value moves in the morning report as well as the overall direction of the cash market before becoming overly aggressive. Cash bids are steady to $1.00 higher with bids scattered through the range. Open interest Monday added 3,604 positions (225,829). Spot month February liquidated 1,752 positions (17,313) and April added 3,143 positions (100,005). Cash lean index for 2/3 is $70.95, up $0.65. DTN projected slaughter for Tuesday is 440,000 head.

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

(SK)

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