DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong buying power is moving back into the feeder cattle complex with triple digit gains seen in nearby contracts. Initial support started slow, but is quickly developing to triple digit gains with April contracts leading the market with a $1.50 per cwt gain. The live cattle market continues to move higher as traders have moved higher in stronger support based on technical support. Corn markets are trading higher in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 25 points lower while Nasdaq is down 2 points.

LIVE CATTLE:

Opening call: Steady to 50 cents higher. Light to moderate buyer support is slowly developing through the live cattle complex as traders try to adjust to the aggressive triple digit market surge seen Tuesday. With April futures posting a $2.15 per cwt rally Tuesday and moving above $123 per cwt, traders continue to bring buyer support back into the market, but remain relatively cautious as there appears to be some position taking potential that may develop before the end of the week. With markets closed Friday before the holiday weekend, traders could focus on this market rally as a great opportunity to adjust trade positions. Cash cattle activity remains quiet early Wednesday morning. Even though the Fed Cattle Exchange trade well develop through the morning, feedlot trade is not expected to develop until later in the week. Bids and asking prices are not fully developed. Open interest Tuesday added 788 positions (394,404). Spot April liquidated 1,288 positions (18,170) and June contracts fell positions (185,802). DTN projected slaughter for Wednesday is 114,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1 higher. Moderate follow through buyer support has quickly moved into feeder cattle futures Wednesday morning as traders quickly jumped back into the complex. The strong triple digit rally Tuesday and strong gains early in the week has added to the continued bullish support across the complex and increased underlying support across the complex. There is increased activity levels developing in April through August contract months which may lead to additional buyer activity. Cash lean index for 4/10 is $133.64, up 0.33. Open interest Tuesday added 399 position (59,296).

LEAN HOGS:

Opening call: $1 lower. Swift losses have quickly developed through lean hog futures as traders have quickly moved into the lean hog futures complex Wednesday morning. The focus on uncertain movement in pork cutout values following the Easter weekend and additional potential pressure in cash markets over the next couple of weeks could add even more softness to the entire hog complex. It appears that summer hog markets may find support levels in the low $70's for cash prices although underlying support could redevelop as summer activity develops. Cash bids are expected to be seen steady to $1 per cwt lower with bids scattered through the range. Open interest Tuesday added 765 positions (204,718). Spot month April fell 567 positions (11,224) and June gained 1,054 positions (85,323). Cash lean index for 4/10 is $65.65, down $0.57. DTN projected slaughter for Wednesday is 442,000 head. Saturday runs are expected to be at 78,000 head.

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

(SK)

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