DTN Before The Bell-Livestock

Light Gains Develop Across In Live Cattle Futures

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

Light to moderate trade has slowly developed early Wednesday morning in futures trade in livestock futures with lean hog trade mixed as cattle markets have posted moderate gains in initial market activity. This could allow for additional market activity later in the session as markets may shift later in the day following trade on the Fed Cattle Exchange. Corn markets are trading higher in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 39 points lower while Nasdaq is up 6 points.

LIVE CATTLE:

Opening call: Steady to 50 cents higher. Light gains are slowly developing across the live cattle futures complex as traders continue to move into the complex. The focus on move into the market following the moderate to sharp losses Monday continue to help to bring some stability back into the complex, but there still seems to be some uncertainty about just how much certainty will be seen when it comes to overall beef market demand and the ability to command higher prices through the summer months. April futures have continued to hold strong $10 per cwt premiums, and this may continue to leave the market looking for a longer term reaction and potential market shift when April goes off the board. There is also additional focus on increased focus on additional direction on cash and beef value direction through the week which may give additional direction to both front and deferred futures contract contracts as the day unfolds. Cash cattle markets still remain quiet early Wednesday morning while the Fed Cattle Exchange will trade later in the day. Asking prices are seen around $132 in the South and $215 and higher in the North although bids are still undeveloped at this point. Open interest Tuesday added 3,039 positions (388,759). Spot April liquidated 1,934 positions (41,799) and June contracts added 2,709 positions (180,170). DTN projected slaughter for Wednesday is 114,000 head.

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FEEDER CATTLE:

Opening call: 50 cents to $1 higher. Light buyer support is developing early Wednesday morning in feeder cattle markets, although the depth of the complex is uncertain at this point given the early week pressure seen in the market. The underlying tone of the complex continues to still remain firm based on the basis of gains seen during the month of March. Resistance levels of $133.70 per cwt levels set last week remain and could be hard to break at this point given the inability to draw additional momentum through the rest of the week. But strong support through the live cattle complex and follow through support in cash cattle trade would help to move markets higher toward this level. Cash lean index for 3/27 is $133.26, up $0.17. Open interest Tuesday added 537 position (57,771).

LEAN HOGS:

Opening call: Mixed. Following another round of strong market pressure Tuesday through the lean hog trade, traders seem to be taking a breather midweek as prices are starting out on either side of unchanged with very little movement seen in nearby contracts. The ability for buying support to move back into the nearby contracts could bring some stability into the complex at the end of the month near the $65 per cwt in April contracts. This could not only help to firm up cash markets but could bring support to pork values and move additional buyer activity over the near future as traders look for spring and summer demand through the Easter season. Cash bids are 50 cents to $1 lower with bids mostly 50 cents lower. Open interest Tuesday fell 2,903 positions (205,641). Spot month April fell 1,571 positions (22,277) and June fell 1,568 positions (79,521). Cash lean index for 3/27 is $69.78, down $0.46. DTN projected slaughter for Wednesday is 440,000 head. Saturday runs are expected to be at 145,000 head.

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

(SK)

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Rick Kment