DTN Before The Bell-Livestock

Strong Gains Redevelop Across Cattle Trade

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Strong gains have quickly developed through the live cattle complex with gains well over $1 per cwt in nearby contracts through the early minutes of trade. This could spark additional widespread gains during the session. Hog futures are mixed with the tone focusing on short covering activity in nearby contracts. Corn markets are trading lower in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 35 points lower while Nasdaq is up 12 points.

LIVE CATTLE:

Opening call: 80 cents to $1.25 higher. Strong follow-through support is quickly moving into live cattle futures as traders have broken through resistance levels Tuesday. Additional upward market momentum is possible through the morning as some additional commercial and noncommercial support appears to be quickly and aggressively moving into the complex. Cash cattle activity remains quiet early Wednesday morning, but the trend over the last several weeks of starting trade on Wednesday could spark additional activity during the day. Bids are expected to redevelop in the same range as Tuesday, although feeders seem reluctant to settle for anything other than firm market moves at this point. Asking prices are around $130 and higher in the South and $214 and higher in the North. Open interest Tuesday added 4,524 positions (367,837). Spot April liquidated 3,870 positions (60,039) and June contracts added 4,881 positions (158,171). DTN projected slaughter for Wednesday is 115,000 head.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

FEEDER CATTLE:

Opening call: 50 cents to $1 higher. Strong follow through buyer support quickly moved into the feeder cattle complex following the aggressive moves in live cattle trade through the last two days. Additional focus will be placed on not only the movement in live cattle futures Wednesday, but the ability to draw cash trade into the market. Cash lean index for 3/20 is $129.95, up $0.25. Open interest Tuesday added 1,521 position (55,379).

LEAN HOGS:

Opening call: Mixed. Lean hog futures continue remain weak with early moves mixed in a narrow range. This is how trade has started off each trading session this week. But the lack of support in previous sessions has allowed for moderate weakness to develop through the session. Traders will closely gauge the buyer support stepping into the market Wednesday in an attempt to stabilize the market for the week. If markets can show light support, it is expected that a firm undertone of commercial buying may step into the complex. Cash bids are steady to 50 cents lower with most bids steady. Open interest Tuesday fell 723 positions (217,325). Spot month April fell 974 positions (36,675) and June fell 144 positions (81,168). Cash lean index for 3/17 is $71.48, down $0.13. DTN projected slaughter for Wednesday is 440,000 head. Saturday runs are expected at 135,000 head.

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

(SK)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Rick Kment