DTN Before The Bell-Livestock

Livestock Futures Remain Mixed on Early Cattle Support

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Livestock futures remain mixed in quiet early trade Thursday morning. Feeder cattle futures are showing the most aggressive buyer support as traders are covering short positions in the lightly traded market. Triple digit pressure in cattle markets Thursday have allowed for some market shifts and position taking to be the main focus of all trade activity. Lean hog futures remain mostly lower as deferred market softness is leading the market direction. Corn markets are trading lower in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 28 points higher while Nasdaq is up 13 points.

LIVE CATTLE:

Opening call: Mixed. Early short covering activity has slowly stepped into the market Thursday morning. There is expected to be some additional support seen in nearby contracts, but deferred futures quickly moved away from initial price support and are trading steady to 2 cents per cwt lower. Traders are looking for additional cash market direction through the session, as well as the potential that beef values may start to stabilize through the end of the week following a strong turn lower over the last couple weeks. Cash cattle trade is expected to remain sluggish early Thursday morning following light trade with prices steady to $1 per cwt higher than last week. Additional trade is expected to need to be done, but short bought packers continue to focus on gaining access to cattle. Much of the activity may be delayed until after the USDA crop reports as outside markets may play a factor in cash activity through the end of the week. Open interest Wednesday fell 2,806 positions (335,817). Spot February liquidated 2,147 positions (17,354) and April contracts fell 2,340 positions (144,599). DTN projected slaughter for Thursday is 115,000 head.

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FEEDER CATTLE:

Opening call: Steady to 70 cents higher. Firm buyer support is stepping back into the market following triple-digit losses midweek. The combination of news of steady to higher cash cattle trade that started to develop Wednesday and short covering has continued to limit the downward market pressure for the moment. March feeder cattle futures continue to lead the complex higher in the opening minutes of trade with gains of 70 cents per cwt. Cash lean index for 2/7 is $127.28, up $0.22. Open interest fell Wednesday 177 position (48,873).

LEAN HOGS:

Opening call: Mixed. Front-month February futures continue to focus on higher price levels as traders look for even tighter supplies over the next couple of weeks. But the longer trend in the market is becoming more cautious even though strong gains have recently developed in summer contracts. The potential that higher hog numbers may continue to put some pressure on market prices could limit additional support later in the spring and summer. Cash bids are 50 cents lower to 50 cents higher with most bids steady to firm. Open interest Wednesday added 3,339 positions (235,609). Spot month February liquidated 511 positions (14,747) and April added 982 positions (104,614). Cash lean index for 2/7 is $72.19, up $0.74. DTN projected slaughter for Thursday is 441,000 head. Saturday runs are expected at 153,000 head

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

(SK)

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Rick Kment