DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures have bounced firmly higher with light trade activity seen in both cattle and hog markets early Friday. The overall tone of the complex remains firm based on increased buyer activity moving back into the market, although the depth of support at the end of the week remains uncertain. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 58 points higher while Nasdaq is up 6 points.

LIVE CATTLE:

Opening call: Steady to 50 cents higher. Follow through buyer support is expected to develop through the morning with initial gains light Friday. But the overall softness seen through the middle of the week seems to have slowed significantly as traders have firmly planted their feed under them. Front month February futures are holding a 7 cent per cwt gain, moving to $117.72 per cwt. The rest of the complex is tightly grouped between 20 and 40 cents per cwt although very light volume remains seen across the complex. This could bring additional support back into the market over the next several hours, as traders try to rebuild some market stability through the entire complex. Cash cattle markets are quiet early Friday morning with additional trade likely to be seen in the North through the day. It appears that cash trade in the South may be done for the week following the trade earlier in the week. Even though additional trade may be seen in the North, it is likely that price levels may have been already set given the initial market moves earlier through the week. Open interest Thursday fell 715 positions (334,995). Spot February liquidated 1,890 positions (15,520) and April contracts fell 1,705 positions (142,888). DTN projected slaughter for Friday is 114,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1 higher. Active buyer activity is quickly developing Friday morning following the triple digit gains seen in the complex Thursday. Little has changed in the overall long term direction of the market, but the overall lack of follow-through pressure seen at the end of the week is helping to spark additional longer term buyer interest in nearby contracts. Front month March futures are posting gains of 80 to 90 cents per cwt during initial trade. It is uncertain just how deep current buyer interest will be, or if these gains can be sustained through the rest of the morning. But the market remains firm, allowing for potential follow through buying activity. Cash lean index for 2/8 is $121.11, up $0.83. Open interest Thursday added 120 position (48,978).

LEAN HOGS:

Opening call: Steady to 60 cents higher. Short covering is flooding into the market early Friday morning as traders focus on the moderate market pullback seen Thursday. There is likely to be some additional follow through support developing in all lean hog futures as commercial support remains firm. The underlying support in fundamental factors of the market at this point is likely to draw additional price momentum through the trading session. There may be some additional late week positioning also developing before the weekend break. Cash bids are 50 cents lower to $1 higher with most bids steady to $1 higher. Open interest Thursday added 1,606 positions (237,138). Spot month February liquidated 545 positions (14,126) and April added 447 positions (105,050). Cash lean index for 2/8 is $72.80, up $0.61. DTN projected slaughter for Friday is 435,000 head. Saturday runs are expected at 157,000 head.

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

(SK)

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