DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures remain under pressure with traders looking for longer term direction from the movement in beef values as well as end of the week moves in cash cattle trade. Lean hog markets continue to wander lower, but aggressive market losses over the last month have created a significant pullback in buyer support during early April. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 145 points higher while Nasdaq is up 26 points.

LIVE CATTLE:

Opening call: Steady to 50 cents lower. Light nearby contract pressure has developed early Wednesday morning with the April contracts moving to $118 per cwt. This lack of support in the complex continues to be driven by a combination of fundamental and technical pressure and not only is impacting the front month contracts, but all markets as traders are backing away from seasonal market highs. It appears that additional pressure may continue to develop over the near future, which could bring about additional liquidation by both commercial and investment traders through early April. Cash cattle markets are still quiet early Wednesday morning with bids still sluggish and trade unreported for the week. It is expected that bids will become more active as the day develops although there may not be much more active trade seen until later in the week. Asking prices are likely to hold at $130 in the South and $210 in the North until late in the week unless a major upset is seen in futures trade. Open interest Tuesday added 3,481 positions (390,790). Spot April liquidated 2,366 positions (31,388) and June contracts fell 2,205 positions (184,559). DTN projected slaughter for Wednesday is 114,000 head.

FEEDER CATTLE:

Opening call: Steady $1 lower. Follow-through pressure continues to add to the sharp losses seen Tuesday. Early pressure is in a tight trading range early Wednesday morning with the focus with April contract falling to $130 per cwt in the opening minutes of trade. This has continues to drive additional liquidation into the complex but additional pressure may still be yet to come given the rapid pace of market support on the upside of the market earlier in March. Cash lean index for 4/3 is $133.30, down 0.03. Open interest Tuesday fell 578 position (57,939).

LEAN HOGS:

Opening call: Mixed. Early trade is trending lower once again with the focus is placed on narrow single-digit prices moves in nearby contracts. The aggressive pressure over the last month has put a lot of softness already in the complex, which is leaving some traders open for rally opportunities. But the continued pressure in fundamentals may keep prices in the current levels over the near future, leaving market stability the best that traders can look for the near term. Cash bids are expected to be seen steady to $1 per cwt lower with most bids steady to 50 cents lower. Open interest Tuesday fell 487 positions (203,872). Spot month April fell 921 positions (16,406) and June gained 1,294 positions (82,062). Cash lean index for 4/3 is $67.07, down $0.52. DTN projected slaughter for Wednesday is 442,000 head. Saturday runs are expected at 82,000 head.

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

(SK)

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