DTN Before The Bell-Livestock

GENERAL COMMENTS

Early trade Friday turned lower Friday in livestock markets as traders prepare for month end. This has resulted in additional moderate to strong pressure in live and feeder cattle markets during the first few minutes of trade, while mixed lean hog trade developed following the Hogs and Pigs report.

Livestock futures are under pressure with cattle and hog markets trading lower after the opening bell Friday. Lean hog futures have weakened following a mixed open as a lighter-than-expected Hogs and Pigs report left traders adjusting, following Thursdays pre-report adjustments. Cattle markets continue to liquidate at the end of the month following the pressure, which has developed over the last couple of days. Corn markets are trading higher in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 40 points lower while Nasdaq is down 7 points.

LIVE CATTLE:

Opening call: Steady to 50 cents lower. Moderate pressure is seen in all live cattle futures as traders have quickly backed away from the $120 per cwt threshold. This breakpoint has created additional but consistent selling movement with all contracts holding 70- cent to 80-cent losses early Friday with the pressure focusing on weakness in both cash markets and the potential for additional follow-through softness through the rest of livestock markets at the end of the month. Trade volume is likely to remain sluggish through most of the trading session, which will add to the overall bearishness of the market condition. Cash cattle trade is likely to become more active through the day following light to moderate trade at lower price levels Thursday afternoon. The focus on extended delivery dates helped to expedite trade activity through the market Thursday and allowed for lower price levels. Most showlists are still priced at $132 in the South $215 in the North. Open interest Thursday fell 984 positions (389,561). Spot April liquidated 2,916 positions (37,099) and June contracts added 821 positions (182,866). DTN projected slaughter for Friday is 112,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1 lower. Follow-through pressure is developing in feeder cattle trade as moderate pressure is seen in both feeder cattle and live cattle markets Friday morning. Although at this point, light volume is seen in feeder cattle trade, the most aggressive pressure is seen in deferred contracts with triple-digit losses seen in late-month contracts. This could lead to additional long-term concerns for traders trying to adjust positions at the end of March. Triple-digit losses are possible in all feeder cattle contracts. Cash lean index for 3/29 is $132.85, down 36. Open interest Thursday added 30 position (58,693).

LEAN HOGS:

Opening call: Mixed. Early trade is expected to remain choppy as traders focus on adjusting to the release of the Hogs and Pigs report Thursday and the sharp pre-report market adjustments seen before the report was released. April through July contracts are holding narrow losses during early trading, while deferred contracts are holding narrow gains, but all contracts are within a narrow market window during the opening minutes of trade. As additional volume steps into the complex, follow-through pressure could move back into the market based on recent pressure in fundamentals seen over the last couple of weeks. Open interest Thursday fell 2,208 positions (202,277). Spot month April fell 2,416 positions (18,702) and June fell 448 positions (79,046). Cash lean index for 3/29 is $68.86, down $0.64. DTN projected slaughter for Friday is 428,000 head. Saturday runs are expected to be at 142,000 head.

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

(SK)

Copyright 2017 DTN/The Progressive Farmer. All rights reserved.