DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate pressure is seen through most livestock futures with cattle markets trending lower with steady weakness seen in summer live cattle and feeder cattle contracts. This softness is likely to draw additional pressure through the rest trading session. Lean hog futures remain mixed in light trade. The light activity is expected to draw increased volume through most of the morning. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 213 points higher while Nasdaq is up 70 points.

LIVE CATTLE:

Opening call: Steady to 80 cents lower. April live cattle futures have trickled lower in light pressure with single digit losses moving into the complex. The rest of the market has quickly advanced lower with pressure from the complex pulling back from light support seen last week. The most significant losses are seen in late summer and fall contracts as traders look for additional pressure to develop through the end of 2017. There may be some additional softness seen through the complex as the session continues as traders look for additional volume as trade volume increases through the week. Cash cattle markets undeveloped early in the week with show lists and asking prices being generated. It will likely be the middle of the week or later before active trade develops. Open interest Friday added 880 positions (409,783). Spot April liquidated 1,145 positions (5,501) and June contracts lost 849 positions (185,672). DTN projected slaughter for Monday is 114,000 head.

FEEDER CATTLE:

Opening call: Steady to 50 cents lower. Light to moderate pressure is moving into nearby feeder cattle futures early Monday morning following the cattle on feed report released Friday afternoon. This may bring some support back into the soon to expire April feeder cattle futures complex, but May through October contracts remain less supportive as traders continue to look for additional longer term pressure through the market with prices 70 to 80 cents lower in early trade. This could draw additional pressure to both live cattle and feeder cattle markets through the rest of the session. Cash lean index for 4/20 is $138.05, up 0.50. Open interest Friday lost 1,640 position (58,929).

LEAN HOGS:

Opening call: Mixed. Narrow trading ranges have developed early Monday morning with the focus on moderate buyer support moving into nearby contracts while the activity in deferred contracts is focusing on narrow long term uncertainty through the complex. With May lean hog futures under pressure with prices testing $63 per cwt even though overall open interest in the front month May contract remains extremely light, the buyer support Monday morning may bring some life to the market. It may not help to bring long term stability to the complex at this point, but could add some support to pork values through the end of April. Cash bids are expected to be seen steady to $1 per cwt lower with bids scattered through the range. Open interest Friday added 3,170 positions (212,577). Spot month May gained 158 positions (1,932) and June gained 179 positions (86,033). Cash lean index for 4/20 is $61.10, down $0.49. DTN projected slaughter for Tuesday is 442,000 head.

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

(SK)

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