DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate to strong gains are seen in cattle futures early Wednesday morning as traders focus on the potential for additional cash market support. The focus on follow through fundamental and technical buyer support in all cattle markets may continue to add to the already bullish market trends. Hog markets are mixed with a market pullback seen early Wednesday as traders take positions following the early week gains. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 26 points higher while Nasdaq is up 3 points.

LIVE CATTLE:

Opening call: 50 to 70 cents higher. Follow through buyer support has quickly moved into the live cattle futures complex which has helped to draw firm support back into the complex. This is adding underlying fundamental and technical support to the already bullish market. With April contracts moving above $130 per cwt, the expectation that additional short term market strength may step back into the complex in the next couple of weeks may spark some additional gains, although some traders are concerned that the sunset may be just on the horizon. Cash markets remain quiet early Wednesday morning with very little direction developing through the first couple days of the week. Show lists are expected to be seen around $134 to $145 in the South and $215 and higher in the North, but the morning activity will be placed on the activity in the Fed Cattle Exchange Auction. The inability for a significant amount of offered cattle to be sold over the last couple of weeks has been the major challenge on the Exchange. This will be once again the center or attention through the morning Feedlot trade may not develop until sometime Thursday or Friday. Open interest Tuesday added 2,090 positions (414,510). Spot April liquidated 1,086 positions (2,086) and June contracts lost 506 positions (182,599). DTN projected slaughter for Wednesday is 115,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1.00 Higher. Strong gains have redeveloped in feeder cattle futures midweek with May through November futures adding 80 cent to $1 per cwt gains in light to moderate volume across the complex. This is creating some increased buyer support through all but front month April contracts. The focus on firming live cattle markets and increased tight supplies through the rest of the summer may continue to drive additional support into the market over the next several trading sessions. Cash lean index for 4/24 is $139.31, down 0.10. Open interest Tuesday added position (58,425).

LEAN HOGS:

Opening call: 10 to 20 cents higher. Narrow gains have slowly developed midweek with light support slowly developed across the complex. This is creating early morning positioning in the hog complex following the aggressive market shifts seen over the last couple trading days. The aggressive market shifts seen in the complex has left the market open for profit taking and could see some wide market swings in the next couple of hours, but there may be some additional upward support developing before the end of the month developing as increased fundamental and technical support is seen moving into the market. Cash bids are expected to be seen 50 cents lower to 75 cents higher with most bids steady. Open interest Tuesday added 2,027 positions (216,647). Spot month May fell 37 positions (2,057) and June fell 2,113 positions (83,614). Cash lean index for 4/21 is $60.16, down $0.33. DTN projected slaughter for Wednesday is 442,000 head. Projections for Saturday runs are expected to be 105,000 head.

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

(SK)

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