DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate buyer support is quickly and uniformly stepping into the livestock complex early Wednesday. The strong triple-digit rally seen Tuesday in cattle trade has once again brought additional support back to the complex. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 227 points higher while Nasdaq is up 49 points.

LIVE CATTLE:

Opening call: Steady to 70 cents higher. Live cattle futures continue to gain support in nearby contracts as the strong triple-digit rally Tuesday has helped to narrow the gap between expired February contracts and the new front month April contract. It is uncertain just how much long term buyer support will develop in this market, but it is expected that the previous strong cash market basis may continue to help support buyer interest through much of the week. Deferred futures are trading higher in early trade, but the narrow moves continue to point to commercial buyer support driving the market at this point trying to establish firm spot month trading ranges. Cash cattle markets remain at a standstill. Bids are undeveloped at this point, but asking prices remain at $128 in the South and $200 and higher in the North. The focus on today's Fed Cattle Exchange Auction will likely direct most markets watchers attention through much of the morning. Open interest Tuesday added 7,282 positions (335,148). Spot February liquidated 439 positions (0) and April contracts added 768 positions (129,841). DTN projected slaughter for Wednesday is 114,000 head.

FEEDER CATTLE:

Opening call: Steady to 50 cents higher. Sluggish market activity is seen through most of the morning following the triple digit rally which developed Tuesday. There continues to be additional buyer support moving into nearby contracts as front month futures have rallied over $3 per cwt within the last week. This could help build additional momentum into the market, but with traders still concerned about longer-term buyer and price support of beef values, there could be some additional choppy movements seen during early March. Cash lean index for 2/27 is $126.96, down $0.10. Open interest Tuesday gained 329 position (51,005).

LEAN HOGS:

Opening call: Steady to 50 cents higher. Light buyer support is slowly trickling into lean hog futures trade following the mixed market activity which developed Tuesday and overall lack of direction starting to be established through the end of February. With the beginning of March now here, there is some expectations that even more focus will be placed on the ability to establish pork values as strong overall demand is still expected to be seen. Cash bids are steady to $1 lower with most bids steady to 50 cents lower. Open interest Tuesday added 620 positions (220,871). Spot month April fell 1,680 positions (84,680) and June added 849 positions (55,415). Cash lean index for 2/27 is $75.89, down $0.83. DTN projected slaughter for Wednesday is 443,000 head, with 127,000 expected Saturday.

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

(SK)

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