DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures are mixed in a narrow trading range early Wednesday with a combination of follow-through selling activity in cattle markets mixed with short-covering. The potential for initial trade volume to ease and markets to break out of the sluggish and narrow range seen near opening trade could spark additional positioning through midweek. Traders continue to focus on the direction of cash market activity in both cattle and hog markets through midweek. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 44 points higher while Nasdaq is up 5 points.

LIVE CATTLE:

Opening call: Mixed. Initial trade Wednesday morning is stuck in a narrowly mixed trading pattern with traders focusing on the inability to actively draw additional trade into the complex. This is keeping prices hovering within a narrow range from 10 cents lower to 10 cents higher in the opening minutes of trade activity. The weaker tone of the market seen Tuesday is still developing through most contract months with traders unable to break out of the long-lasting trading range seen across the market, but still focusing on the ability to draw buyers back into the complex late in the week. April futures are hovering near $16.40 per cwt during early trade, and a move below $16 per cwt through the morning would likely spark additional strong liquidation. But this would still not be technically significant at this point. Cash cattle markets started to unfold late Tuesday following the pressure in futures trade. Even though light trade developed in the South and North, it is unlikely there is enough trade to establish a market trend. Prices are seen from $122 to $124 per cwt in the South and $199 in the North. There may be some additional movement midweek surrounding the Fed Cattle Exchange Auction and further packer bids developing Wednesday. Asking prices are seen around $128 to $129 per cwt in the South and $204 and higher in the North. Open interest Tuesday added 1,975 positions (350,015). Spot April liquidated 2,968 positions (78,581) and June contracts added 3,347 positions (135,988). DTN projected slaughter for Wednesday is 114,000 head.

FEEDER CATTLE:

Opening call: Mixed. Short-covering early Wednesday morning continues to be the main order of business through the feeder cattle complex. Even though the feeder cattle complex was able to avoid sharp triple-digit losses Tuesday similar to the live cattle trade, the uncertainty in the complex continues to limit buyer support early after opening bell. Markets are mixed in a narrow range as traders continue to look for additional longer term direction from the live cattle complex. Cash lean index for 3/13 is $127.42, up $0.33. Open interest Tuesday added 360 position (49,854).

LEAN HOGS:

Opening call: Mixed. Firm buyer support seen over the last two trading sessions is expected to bring in a combination of position covering as well as follow through buyer support within the first few hours of trade. Nearby contracts are most heavily impacted by position taking Wednesday morning while light to moderate gains are holding in deferred contracts. The direction of the wholesale pork complex through the morning is likely to bring additional market adjustments through the end of the day, but for now, traders remain focused on the ability to draw additional volume to the complex. Cash bids are steady to $1 lower with most bids steady. Open interest Tuesday gained 1,900 positions (216,662). Spot month April fell 1,983 positions (44,215) and June added 936 positions (75,863). Cash lean index for 3/13 is $71.94, down $0.20. DTN projected slaughter for Wednesday 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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