DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures continue to tumble lower as strong pressure has developed in live cattle and feeder cattle markets. This has created uncertainty in all markets based on growing liquidation in nearby and deferred selling activity. Lean hog futures remain mixed in early trade as traders try to bring a sense of stability to the complex. Corn markets are trading lower in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 27 points lower while Nasdaq is down 7 points.

LIVE CATTLE:

Opening call: Steady to $1 lower. Strong early morning pressure has quickly moved into the live cattle complex as traders have quickly broken through the $120 per cwt support level in front month April contracts and $110 per cwt levels in June contracts. There continues to be uncertainty about rebuilding seasonal support in the market. Early losses of 70 to 90 cents per cwt has allowed for active liquidation through all nearby contracts and is creating longer term concerns from not only a fundamental, but also a technical perspective. This could bring about follow through pressure during the rest of the week. Cash cattle markets remain quiet with bids still undeveloped. Asking prices are starting to be seen with initial prices heard at $130 in the South and $210 in the North. It is likely to be midweek or later before active bids are seen. Open interest Monday added 2,411 positions (394,372). Spot April liquidated 2,340 positions (33,746) and June contracts added 2,257 positions (186,873). DTN projected slaughter for Tuesday is 115,000 head.

FEEDER CATTLE:

Opening call: Steady $1 lower. Firm pressure has continued to develop through the rest of the market as traders have moved through the complex. This could lead to quick triple-digit losses in most markets as traders are focusing on additional losses in front month April contracts as traders are quickly backing away from the $133 per cwt support levels and concerns that support in the entire market may be in danger of follow through pressure over the near term. This could bring about additional pressure over the next several weeks as traders look for additional softness in both cash and beef value markets. Cash lean index for 3/31 is $133.33, up 60. Open interest Monday fell 488 position (58,517).

LEAN HOGS:

Opening call: Mixed trade has been seen early in the session Tuesday as traders are trying to bring some stability into the market through the beginning of the month of April. Following the strong pressure seen through summer month trade, trades are once again focusing on weaker pork market fundamentals although the numbers from the hogs and pigs report from last week is not as bearish as expected. This could bring in some new perspective through the week and may bring some light to moderate buying by the end of the day. Light pressure is slowly stepping back into the market as traders have once again moved back to the market with front month April contracts trading steady early Monday morning while other nearby contracts holding 5 to 25 cent losses. The concern that additional narrow losses may continue to develop in cash markets through early April has continued to erode market pressure through early trade and left many traders on the sidelines during the early minutes of the market. Cash bids are expected to be seen steady to $1 per cwt lower with most bids steady to 50 cents lower. Open interest Monday fell 15 positions (203,390). Spot month April fell 678 positions (17,330) and June gained 1,021 positions (80,770). Cash lean index for 3/31 is $67.59, down $0.61. DTN projected slaughter for Tuesday is 440,000 head. Saturday runs are expected at 78,000 head.

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

(SK)

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