DTN Before The Bell-Livestock

Firm Buyer Activity Pushes Cattle Prices Higher

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

Light to moderate buying activity is quickly developing across the cattle market. This is helping to bring increased trade volume to the entire complex. Hog futures are under additional strong pressure with triple digit losses expected to hold through most of the morning. Corn prices are mixed in light trade. Stock markets are lower, Dow Jones is 30 points lower while Nasdaq is down 29 points.

LIVE CATTLE:

Open: Steady to 60 cents higher. Firm buyer support is slowly trying to become established as traders are not only focusing on short covering opportunities following the pullback in prices over the last two days, but an attempt to reestablish market support that could help to build market support over the near future. There is likely to be some additional buyer activity moving into the complex as the focus on cash market activity will move front and center in the market over the next couple of days. There is also likely to be some increased activity seen in nearby February and April futures as markets move above $125 per cwt once again. Cash cattle interest is still extremely quiet in all areas of cattle country with a few asking prices redeveloping in the South at $129 to $130 per cwt. Bids are unavailable, but expected to become more evident, at least in the South along the same lines as seen Tuesday, possibly around $124 through much of the morning. Asking prices and bids are still undeveloped in the North, which is likely to push trade off until Thursday or Friday sometime at this point. The Fed Cattle Exchange Auction will take place through the morning, as traders will casually watch trade activity and price direction in determining any sense of market shifts that may spill over to active feedlot trade. Open interest Tuesday added 1,441 positions (369,776). Spot February lost 587 positions (21,746) and April contracts gained 719 positions (152,791). DTN projected slaughter for Wednesday is 117,000 head.

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FEEDER CATTLE:

Open: Mixed. Light gains in nearby contracts are being offset by initial pressure still moving into the deferred contracts. Although most of the volume Wednesday morning has moved into spring and summer contracts with prices holding light to moderate gains. This could help to bring increased buyer support back to the market as traders attempt to bring some stability back into the cattle complex following the sharp market tumble early in the week. Cash index for 2/2 is listed at $148.12, up 0.09. Open interest Tuesday added 406 positions (56,488).

LEAN HOGS:

Open: Steady to $1 lower. Strong market losses have redeveloped across nearby lean hog futures early Wednesday morning as concern of additional fundamental and technical pressure have swept through the complex. Initial moves lower in April futures have now quickly broken through December lows at $70.17 per cwt with prices hovering near $70.50 per cwt. The ability to ratchet prices lower over the next several days could take out additional support levels along the way. Cash hog trade Wednesday is expected steady to $2 lower. Most bids are expected to be 50 cents lower. Open interest Tuesday lost 2,330 positions (237,717). Spot month February liquidated 1,711 positions (13,047) and April fell 200 positions (101,038). Cash lean index for 2/2 is $74.48, up 0.38. DTN projected slaughter for Wednesday is expected to be 465,000 head. Saturday runs are estimated at 85,000 head.

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

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Rick Kment