DTN Before The Bell-Livestock

Mixed Trade Seen in All Markets Early Wednesday

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Mixed trade is developing in all livestock markets early Wednesday morning with the overall lack of support developing following the pressure in the first few minutes of trade. The strong gains seen Tuesday in cattle markets have allowed for position taking to develop, although initial trade remains in a narrow range. Corn futures are lower in light trade. Stock market futures are higher, Dow Jones is 56 points higher while Nasdaq is up 34 points.

LIVE CATTLE:

Open: Mixed. Narrow trading ranges are seen early Wednesday morning with traders focusing on the inability to draw additional support back into the complex. This may help to draw support back to the table following the strong market gains early in the week. But traders remain cautious given the lack of follow through gains in feeder cattle trade so far this morning. This could help to draw additional support back to the table even though market activity is likely to be extremely sluggish. Cash cattle markets remain quiet early Wednesday morning. Although the Fed Cattle Exchange Auction will trade through the morning, the overall light activity seen over the last few weeks is expected to continue, limiting any significant market direction. Bids are undeveloped and likely to be until later in the week. Although a few southern cattle have been priced at $126 and higher, most of cattle country has seen very little asking prices at this point. It is likely to be sometime Thursday or Friday before cash trade develops. Open interest Tuesday added 4,715 positions (339,800). Spot February lost 707 positions (119,190) and April contracts gained 4,293 positions (95,547). DTN projected slaughter for Wednesday is 118,000 head.

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FEEDER CATTLE:

Open: Steady to 20 cents lower. Extremely narrow trading ranges have developed across the entire feeder cattle market as traders are trying to adjust to the sharp triple digit gains seen early in the week. The ability to post near limit gains at closing bell in March futures is helping to limit the downside of the market as traders try to square positions. But given the underlying support in the cattle market and gains seen early in the week, it is likely that buyer interest will develop later in the day which could wash out the current narrow losses. Cash lean index for 1/1 is listed at $155.33, down 0.69. Open interest Tuesday lost 169 positions (51,748).

LEAN HOGS:

Open: Mixed. Light to moderate pressure is seen in most nearby lean hog futures trade with traders focusing on the strong pullback in front month futures Tuesday and concerned that additional weakness may develop over the next couple of weeks. Although there remains fundamental support in the market, the ability to draw traders back to the table in February and April contracts remains limited and could keep many buyers on the sidelines over the next couple of days. Cash bids are steady to $2 per cwt higher. Most bids are $1 higher. Open interest Tuesday fell 796 positions (242,746). Spot month February fell 2,711 positions (84,709) and April added 732 positions (69,936). Cash lean index for 12/29 is $62.23, up 0.45. DTN projected slaughter for Wednesday is 460,000 head. Saturday runs are projected at 385,000 head.

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

(SK)

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Rick Kment