DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures are trading mostly higher with the most aggressive gains seen in the lean hog and feeder cattle trade. The ability to draw commercial traders back to the table following moderate to sharp losses Monday is likely to help bring some needed stability back into the complex. Corn markets are trading lower in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 10 points lower while Nasdaq is down 9 points.

LIVE CATTLE:

Opening call: Steady to 50 cents higher. Short covering activity is expected to be the main order of business through the first hour of trade with nearby contracts posting moderate gains even though volume remains light in the early minutes of trade Tuesday. Front month February futures continue to hover over $116 per cwt after falling slightly below that threshold late Monday. The continued firm basis levels in cash markets is having very little impact in swiftly changing the overall tone of the market Tuesday morning. This could keep prices hovering in a narrow to moderate range through most of the morning. Cash cattle markets are silent with bids and asking prices undeveloped at this point. There is very little evidence that active market movement will be seen early in the week and active trade could easily be pushed off until Thursday or Friday. Open interest Monday fell 1,737 positions (329,965). Spot February liquidated 802 positions (12,997) and April contracts fell 2,028 positions (137,752). DTN projected slaughter for Tuesday is 114,000 head.

FEEDER CATTLE:

Opening call: Steady to 80 cents higher. Firm buyer support is trickling into the cattle market with feeder cattle trade leading the upward movement in the complex. This is adding additional support in March through August contracts and could spark some additional interest through the rest of the trading session. There will be increased focus on outside market moves and the desire for commercial traders to quickly step back into the complex through midweek. Cash lean index for 2/10 is $128.41, up $0.24. Open interest Monday added 1,224 position (50,982).

LEAN HOGS:

Opening call: Mixed. Early activity Tuesday morning is focused on short covering in nearby contracts following the strong pressure seen in April to June contracts that developed Monday. The lack of follow through futures trade is slowly bringing the concern that overall cash markets and pork values may start to cool through the end of the month. Overall domestic pork demand and exports continue to remain extremely strong, but there is growing concern that the supply tightness may quickly come to an end during the spring months. Cash bids are 50 cents lower to $1 higher with most bids steady. Open interest Monday lost 2,365 positions (234,853). Spot month February fell 1,015 positions (13,193) and April lost 2,134 positions (102,636). Cash lean index for 2/10 is $74.11, up $0.60. DTN projected slaughter for Tuesday is 432,000 head. Saturday's runs are expected to be 191,000 head.

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

(SK)

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