DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm follow-through buyer support has moved into cattle futures early Tuesday morning as traders continue to draw on the support seen Monday afternoon. This has been led by the aggressive rocket-like movement in feeder cattle futures over the last couple of weeks. Lean hog futures are mostly lower with moderate pressure developing following the concerning weakness in cash hog values expected to be seen through in morning bids. Corn markets are trading lower in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 55 points lower while the Nasdaq is down 5 points.

LIVE CATTLE:

Opening call: Steady to 30 cents higher. Narrow gains have been seen early Tuesday morning, although the early week support seen in all cattle markets which quickly developed Monday has helped to spark widespread underlying support in both live cattle and feeder cattle markets. The gains have been commercially driven by buying in April contracts, which continues to test resistance levels and push prices at $127 per cwt. There may continue to be additional buyer support moving into the June contracts as prices react the $116-per-cwt price level and draw additional commercial and additional investment interest during spring and summer months. The ability to sustain this level of activity through the next several weeks is the main concern of most traders at this time. Cash cattle markets are quiet with bids undeveloped at this point in the week and asking prices generally quiet. A few cattle have been talked about around $130 in the South, but it may be later in the week until additional confirmation can be seen surrounding those numbers. Active trade is likely to be held off until the second half of the week. Open interest Tuesday added 5,221 positions (404,366). Spot April liquidated 1,485 positions (13,420) and June contracts gained 2,522 positions (187,698). DTN projected slaughter for Tuesday is 114,000 head.

FEEDER CATTLE:

Opening call: Steady to 50 cents higher. Narrow gains have trickled into feeder cattle futures following the strong follow-through support seen in the complex. This continues to drive feeder cattle futures higher during the month of April, which is creating some concerns about how much follow-through support can continue during the rest of the spring. Cash lean index for 4/14 is $136.12, up 0.34. Open interest Monday added 199 position (60,151).

LEAN HOGS:

Opening call: Steady to 30 cents lower. Light-to-moderate selling pressure is expected to redevelop through the lean hog futures market early Tuesday morning as traders continue to focus on the additional pressure in cash markets. There may not be follow-through consistency in trade during the rest of the morning as traders continue to focus on the narrow traded May contract as front-month futures with most of the Activity seen in June contracts even through it is not the front-month futures trade. Cash bids are expected to be seen steady to $1 per cwt lower with bids scattered through the range. Open interest Monday added 1,728 positions (206,852). Spot month April gained 290 positions (10,781) and June gained 395 positions (85,849). Cash lean index for 4/14 is $62.59, down $0.60. DTN projected slaughter for Tuesday is 442,000 head. Saturday runs are expected to be at 212,000 head.

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

(SK)

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