DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm gains have quickly developed through the complex with traders moving back into the live cattle market. Triple digit gains in nearby live cattle contracts is helping to draw additional support through the entire complex. Hog futures remain mixed in early trade due to lack of active market activity. Corn markets are trading lower in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 6 points lower while Nasdaq is up 15 points.

LIVE CATTLE:

Opening call: Steady to $1 per cwt higher. Strong buyer support is seen in nearby contracts with April and June futures holding triple-digit support, while the support in deferred contracts remains extremely sluggish. There continues to be additional focus on the strong beef value support through the week, which could continue to draw buyer activity back into the market. Outside market shifts are likely to bring additional market activity back into the complex through morning trade, which could spark additional commercial buyer support. Cash cattle trade is still undeveloped, although a few starting bids have been seen in Kansas at $121 per cwt. Asking prices remain firm at $125 to $127 per cwt in the South while at $202 and higher in the North. Active trade may be delayed until sometime Thursday or Friday, but the last two weeks have shown us that activity can escalate quickly. Open interest Tuesday fell 1,197 positions (338,965). Spot April liquidated 7,500 positions (107,237) and June contracts added 4,368 positions (110,217). DTN projected slaughter for Wednesday is 112,000 head.

FEEDER CATTLE:

Opening call: Steady to 50 cents higher. Light buyer support is slowly moving into the feeder cattle complex. Uniform buyer support is stepping into the spring and summer contracts with the focus on the renewed support in the live cattle market. Trade is expected to remain sluggish through most of the market, although traders may become more focused on increased trade activity and likely added volatility through the end of the trading session Wednesday. Cash lean index for 3/6 is $126.97, up $0.11. Open interest Tuesday lost 465 position (50,009).

LEAN HOGS:

Opening call: Mixed. Lean hog futures remain mixed in a moderate trading range with a combination of follow through buyer support and short covering developing following the strong gains seen earlier in the week. April futures are the only nearby contract to hold gains just after opening bell with a 25 cent per cwt gain. The rest of the 2017 contract months are holding losses of 15 to 30 cents per cwt. Trade is expected to remain sluggish through most of the session, but traders continue to look for increased pork market support and the potential to stabilize cash values at the end of the week. Cash bids are steady to $1 lower with most bids steady. Open interest Tuesday fell 2,650 positions (216,300). Spot month April fell 6,629 positions (67,218) and June added 2,486 positions (62,541). Cash lean index for 3/6 is $72.69, down $0.23. DTN projected slaughter for Wednesday is 443,000 head, with 120,000 expected Saturday.

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

(SK)

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