DTN Before The Bell-Livestock

Follow-Through Support Developing in Livestock Futures

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

Livestock futures are holding strong buyer support early Wednesday morning following the strong triple-digit gains seen flooding into the market late Tuesday. There will be continued focus on the direction of cash activity over the next couple of days, which could help to bring additional support to markets. Corn markets are trading lower in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 30 points higher while Nasdaq is up 5 points.

LIVE CATTLE:

Opening call: Steady to 50 cents higher. Follow through buyer support is quickly moving back into the live cattle complex even though price levels are remaining somewhat subdued through the morning. Triple-digit gains in nearby contracts seen at the end of the trading session Tuesday is drawing additional commercial interest back into the market. There could be some additional support developing later in the day, but traders are closely watching both outside markets and the movement in cash trade through the rest of the week. Cash cattle markets are generally quiet with bids still unavailable at this point. There are a few asking prices starting to surface at $122 in the South and $192 and higher in the North. The potential that active trade will be delayed until sometime Thursday or Friday is looking more and more likely. Open interest Tuesday fell 2,324 positions (327,629). Spot February liquidated 1,377 positions (11,620) and April contracts fell 1,994 positions (135,757). DTN projected slaughter for Wednesday is 115,000 head.

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FEEDER CATTLE:

Opening call: Steady to 80 cents higher. Following the late-day surge in feeder cattle futures late Tuesday, active buyer support is quickly redeveloping across the complex. This may spark additional interest in all contracts, although the majority of buyer activity is expected to be centered in March through May contract months at this point. The ability to establish support levels above $122 per cwt on a long term basis could help to draw additional interest back into the market. Cash lean index for 2/13 is $128.46, up $0.05. Open interest Tuesday added 224 position (51,213).

LEAN HOGS:

Opening call: 30 to 70 cents higher. Moderate to strong buyer support is expected to redevelop early Wednesday morning following the overall lack of pressure after triple digit gains were seen Tuesday. The continued fundamental support coming from firmness in cash markets as well as the continued demand support for pork is helping to extend market gains. Cash bids are 50 cents lower to $1 higher with most bids steady to $1 higher. Open interest Tuesday added 2,826 positions (237,544). Spot month February fell 770 positions (12,288) and April gained 163 positions (102,799). Cash lean index for 2/13 is $74.62, up $0.51. DTN projected slaughter for Wednesday is 432,000 head. Saturday's runs are expected to be 194,000 head.

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

(SK)

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Rick Kment