DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm buyer support is slowly but steadily developing in cattle trade early Tuesday morning. This is helping to pull markets away from strong market lows seen last week. The overall lack of follow through pressure seen after losses in the last couple of weeks could help to build additional incentive to stabilize prices. Overall trade through the week is likely to remain sluggish in all markets, but this may still keep markets volatile. Corn futures are lower in light trade. Stock market futures are mixed, Dow Jones is 5 points higher while Nasdaq is down 37 points.

LIVE CATTLE:

Open: Steady to 50 cents higher. Moderate buyer activity is moving into live cattle trade during early week activity. The initial support in the complex is offsetting aggressive pressure seen late last week that continues to shift prices at or below $120 per cwt over the last week. It is uncertain just how much market depth that traders will be able to establish early Tuesday, but the initial move in all nearby contracts has helped to spark additional support through the complex. Cash cattle activity is expected to remain quiet early Tuesday morning as both sides are trying to step back to the plate following the Christmas weekend. The winter blast that has moved through much of the Midwest has created some concern of moving cattle and may limit the activity levels early in the week. Initial inventory and show list distribution will be the main order of business Tuesday with most active trade likely to be pushed to the last half of the week. Open interest Friday added 676 positions (331,025). Spot December lost 434 positions (2,016) and February contracts fell 672 positions (120,608). DTN projected slaughter for Tuesday is 114,000 head.

FEEDER CATTLE:

Open: Steady to 60 cents higher. Light but firm buyer support is slowly stepping back into the feeder cattle complex Tuesday morning. Traders have seemed to take a break from the aggressive triple digit losses seen last week as a combination of short covering and post-holiday commercial support is slowly stepping into the market during Tuesday trade. This could bring additional support back to the market, but given the volatility of the complex. There may be some additional uncertainty over the near future. Cash lean index for 12/21 is listed at $149.92, down 0.28. Open interest Friday lost 413 positions (53,038).

LEAN HOGS:

Open: Mixed. Narrow trade ranges are developing early Tuesday morning as traders step back into the market following the long holiday weekend. The focus on narrow gains in front month February futures is being offset by sluggish 10 to 25 cent per cwt losses in the rest of the complex with trader activity extremely light during the initial minutes of trade. This may limit additional activity through most of the morning. Cash bids are steady to $1 per cwt higher. Most bids are steady to 50 cents higher. Open interest Friday added 1,441 positions (228,854). Spot month February fell 328 positions (86,924) and April added 755 positions (60,697). Cash lean index for 12/21 is $61.76, down 0.24. DTN projected slaughter for Tuesday is 372,000 head.

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

(SK)

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