DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong follow-through gains are developing in the cattle complex with nearby contracts posting gains 50 cents to 90 cents per cwt higher in live cattle and feeder cattle markets. The overall lack of direction in lean hog futures complex is not yet creating concerns, but hog markets continue to take a back seat to the recent moves in cattle futures. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 34 points higher while Nasdaq is up 5 points.

LIVE CATTLE:

Opening call: Steady to $1 higher. Sparked by additional strong cash cattle trade moderate to strong buyer support is seen in nearby contract months. The April futures continues to lead the market higher with a gain 90 cents per cwt. This may spark additional market support through the complex, although April live cattle futures still remain at a $10 per cwt discount from current cash markets. The lack of support in the futures trade compared to the red hot cash cattle trade is concerning. Cash cattle traded higher once again Wednesday with Southern deals seen from $125 to $128.50 per cwt with most sales seen at $128 per cwt. Northern trade was marked at $205 to $210 which is mostly $9 per cwt higher given that most deals were seen at $210 per cwt. Some additional trade may continue to develop through the end of the week, but there could be some focus on additional market activity. Open interest Wednesday added 779 positions (350,653). Spot April liquidated 4,172 positions (74,332) and June contracts added 2,752 positions (138,732). DTN projected slaughter for Thursday is 115,000 head.

FEEDER CATTLE:

Opening call: Steady to $1 higher. Moderate buyer support is redeveloping in feeder cattle futures early Thursday morning, even though trade remains sluggish compared to the triple-digit rally seen earlier in the week. The focus on growing strength in live cattle cash market trade continues to spark additional buyer support through the complex. There is uncertainty about just how much long term support will continue to develop and if feeder cattle futures can move prices above the $130 per cwt level. Cash lean index for 3/14 is $127.61, up $0.19. Open interest Wednesday added 501 position (50,292).

LEAN HOGS:

Opening call: Mixed. Lean hog futures have opened mixed in a choppy and narrow trading range although the underlying tone of the market remains firm Thursday morning. April futures have bounced back from a loss of 75 cents per cwt, and is posting 15 cents per cwt in light trade. The overall lack of support in the lean hog complex midweek is being driven by buyer momentum in the cattle complex. Cash bids are steady to $1 lower with most bids steady to weak. Open interest Wednesday gained 263 positions (216,847). Spot month April fell 1,917 positions (42,285) and June added 1,527 positions (77,388). Cash lean index for 3/14 is $71.99, up $0.05. DTN projected slaughter for Thursday is 440,000 head. Saturday runs are expected at 145,000 head.

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

(SK)

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