DTN Before The Bell-Livestock

GENERAL COMMENTS

Light to firm gains are expected to trickle into the livestock market with firm buyer support likely to hold through much of the morning. The wild price shifts seen over the last week may help to bring some needed stability to both live cattle and lean hog markets through the end of the month. Corn markets are trading lower in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 34 points lower while Nasdaq is down 10 points.

LIVE CATTLE:

Opening call: Steady to 50 cents higher. Light to moderate gains are developing over the live cattle complex. The sharp triple digit losses Friday in all contracts except Spot February futures is opening the room for aggressive short covering to develop. There may be some additional market shifts through the morning, but given the market pullback at the end of last week, moderate support is likely to hold through much of the session. Cash cattle activity is expected to remain quiet through most of the day with the focus on outside market activity and sharp shifts in futures trade late last week. The strong support in cash cattle trade through the middle of last week helped to draw additional interest back into the market but movement is expected to be limited to show list distribution and inventory taking. Open interest Friday added 461 positions (327,476). Spot February liquidated 1,289 positions (1,369) and April contracts added 446 positions (129,878). DTN projected slaughter for Monday is 114,000 head.

FEEDER CATTLE:

Opening call: Steady to 50 cents higher. Early trade is expected to draw light to moderate buyer support back into the complex following the sharp triple digit losses which developed at the end of last week. The Even with moderate gains developing following the cattle on feed report, the inability to move back to previous price levels will keep the feeder cattle and entire cattle complex uncertain. The concern that spot month feeder cattle futures are trading at a discount to spot month live cattle contracts continues to add volatility to the market. Cash lean index for 2/23 is $127.20, down $0.21. Open interest Friday fell 597 position (51,676).

LEAN HOGS:

Opening call: Steady to 50 cents higher. Light to moderate buyer support is stepping back into the lean hog futures complex with traders focusing on additional buyer support following the strong triple-digit gains seen late last week. The price volatility in the complex continues to be driven by strong moves in April contracts, while the rest of the complex remains stuck in a narrow trading range. The overall lack of wide market moves in deferred contracts continues to add concern to many traders who are looking for market stability through the summer. Cash bids are steady to $1 lower with bids scattered through the range. Open interest Friday liquidated 3,425 positions (220,956). Spot month April fell 4,662 positions (86,679) and June fell 32 positions (54,358). Cash lean index for 2/23 is $77.39, down $0.34. DTN projected slaughter for Monday is 442,000 head.

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

(SK)

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