DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures are mixed to mostly lower in light trade as the focus on the complex continues to surround outside market activity as well as the potential for cash markets to stabilize through the end of the week. Light market shifts may continue to develop in lean hog and live cattle futures as traders look for further market direction. Corn markets are trading lower in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 7 points higher while Nasdaq is down 8 points.

LIVE CATTLE:

Opening call: Steady to 50 cents lower. Light to moderate pressure quickly moved back into the live cattle complex early Thursday morning. This lack of follow through support after cash markets started to trade as well as firm buyer support moving into nearby and deferred contracts could lead to even more uncertainty. There continues to be some uncertainty as to the long-term direction in the market as futures continue to hold a strong discount to cash markets. Early trade is expected to remain extremely light, although there will be more focus in outside markets as well as the development of additional cash activity through the morning, which will impact futures trade significantly. Cash cattle markets are quiet early Thursday morning following moderate to active trade in the South Wednesday. Trade developed in the South at $125 per cwt which is steady with last week. There is expected to be trade developing in the North over the next couple of days, but trade through the South may be completed. Open interest Wednesday gained 5,800 positions (340,875). Spot April liquidated 1,992 positions (127,902) and June contracts added 2,960 positions (100,003). DTN projected slaughter for Thursday is 114,000 head.

FEEDER CATTLE:

Opening call: Steady to $1 higher. Firm pressure is redeveloping across the feeder cattle market Thursday morning despite the ability to move additional cash cattle trade in the live market early in the week. The concern surrounding the ability to actively increase open interest and the continued discount in deferred live cattle futures is likely to add even more pressure to the feeder cattle futures complex. Cash lean index for 2/28 is $127.03, up $0.07. Open interest Wednesday fell 1 position (50,957).

LEAN HOGS:

Opening call: Mixed. Light activity is expected to be seen through the entire lean hog complex Thursday morning as traders focus on the recent stability in cash markets. This could help to draw commercial traders back to the table, but it is uncertain just how much longer term support may develop across the complex through the end of the week. Traders will closely focus on the overall longer term direction of pork values before actively moving back into the market near the recent highs above $79 per cwt. Cash bids are steady to 50 cents lower with most bids steady. Open interest Wednesday added 1,611 positions (222,492). Spot month April fell 2,359 positions (82,332) and June added 2,262 positions (57,676). Cash lean index for 2/28 is $74.77, down $1.17. DTN projected slaughter for Thursday is 443,000 head, with 130,000 expected Saturday.

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

(SK)

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