DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong gains developed into lean hog futures early Thursday morning with triple-digit support. This is building on the activity following the pullback Wednesday. Cattle futures Thursday remain mixed in a narrow range. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 14 points higher while Nasdaq is up 19 points.

LIVE CATTLE:

Opening call: Mixed. Light trade is seen early Thursday morning. April futures have regained moderate support of 50 to 60 cent gains, while the rest of the complex has hovered within a 10 to 15 cent loss due to extremely sluggish trade volume within the first few minutes of trade. The overall lack of direction following the near limit gains seen Wednesday has created some uncertainty across the complex. The potential for follow through buyer support exists as strong commercial support has moved into the complex. But uncertainty seems to be seen as well as traders focus on the lack of direction through seasonal markets. Cash markets are sluggish early Thursday following the light trade that developed late Wednesday. The early movement in the Fed Cattle Exchange Auction seen Wednesday morning allowed for just a few dressed sales in the North to develop around $212 to $213. This is $4 to $5 per cwt higher than last week. Bids are expected to develop near $128 in the South and $212 in the North. While asking prices will likely remain at $134 and higher in the South and $215 to $218 in the North. Open interest Wednesday added 5,695 positions (420,172). Spot April liquidated 1,215 positions (1,771) and June contracts added 722 positions (183,318). DTN projected slaughter for Thursday is 115,000 head.

FEEDER CATTLE:

Opening call: mixed. Light trade is seen in feeder cattle futures in the opening minutes of trade Thursday morning. The aggressive limit higher trade in August and September contract months has allowed for traders to focus on position taking opportunities during early morning in order for the market to try to catch its breath. With the feeder cattle contract gaining more than $20 per cwt in less than two months, traders remain concerned that the aggressive rapid market support can create uncertainty and lack of direction at these price levels. Cash lean index for 4/25 is $139.44, up 0.13. Open interest Wednesday added 2,018 position (60,441).

LEAN HOGS:

Opening call: $1 higher. Strong early buyer support has quickly moved into lean hog trade Thursday morning as traders look for strong buyer support to develop in cash hog values and the potential that firm gains may start to develop in pork values at the end of the week. There may be some additional support seen in summer lean hog futures with triple-digit gains expanding across all 2017 contracts and gaining additional buyer support into all most nearby contract months. Cash bids are steady to $1 higher bids scattered through the range. Open interest Wednesday added 1,258 positions (217,894). Spot month May fell 46 positions (2,011) and June fell 1,263 positions (82,332). Cash lean index for 4/25 is $59.93, down $0.23. DTN projected slaughter for Thursday 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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