DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures remain under pressure early Friday morning. The lean hog futures complex is showing the most aggressive pressure as traders look for further pressure in cash values at the end of the week. Even though moderate fundamental stability developed early in the week, there is uncertainty as to how much market support can be sustained through the upcoming sessions. Corn markets are trading lower in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 3 points lower while Nasdaq is down 2 points.

LIVE CATTLE:

Opening call: Steady to 50 cents lower. Moderate pressure is quickly developing Friday morning in live cattle futures. Even though cash cattle trade has firmed through the week, the expectation that active commercial support remains unwilling to step back into nearby contracts. This could continue to add even more weakness to nearby contracts. April futures are trading below $116 per cwt through the morning, but given the choppy trade range over the last couple of weeks, traders are now looking at maintaining support levels at $115 per cwt. Cash cattle markets are essentially done trading for the week following active trade in all areas over the last two days. There could be some clean up trade developing, but the tone of the market and price is likely to have been set. Open interest Thursday gained 1,175 positions (341,845). Spot April liquidated 4,625 positions (123,210) and June contracts added 3,074 positions (103,042). DTN projected slaughter for Friday is 110,000 head.

FEEDER CATTLE:

Opening call: Steady to 30 cents lower. Feeder cattle futures remain the calmest market in the livestock complex early Friday morning. Traders seem to have accounted for most if not all of the downward pressure during the Thursday session with narrow losses holding just after opening bell. The firm pressure in the rest of the market continues to leave questions about if renewed liquidation will quickly develop through the complex. March futures are holding a 30 cent loss, but could bring some much needed stability into the feeder complex at the end of the week. Cash lean index for 2/28 is $127.03, up $0.07. Open interest Thursday fell 222 position (50,631).

LEAN HOGS:

Opening call: 50 cents to $1 lower. Late week pressure is quickly moving into the lean hog futures complex with traders unable to hold gains Thursday leaving many traders unwilling to step back into the complex Friday morning. This may create moderate liquidation through the end of the week, and widen the overall price shift. The inability for traders to move back into front-month April contracts is putting even more pressure on the movements in the cash complex at the end of the week. Cash bids are steady to 50 cents lower with most bids steady. Open interest Thursday added 1,011 positions (222,526). Spot month April fell 722 positions (81,611) and June added 806 positions (58,484). Cash lean index for 3/1 is $74.01, down $1.17. DTN projected slaughter for Friday is still uncertain based on mechanical issues. Total numbers are expected to range between 415,000 and 432,000 head, with 130,000 expected Saturday.

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

(SK)

Copyright 2017 DTN/The Progressive Farmer. All rights reserved.