DTN Before The Bell-Livestock

GENERAL COMMENTS

Narrow trading ranges are seen midweek with a combination of follow-through pressure and short covering is developing in cattle and hog trade. The uncertainty surrounding the ability to draw cash prices higher in the cash cattle market as well as volatility in pork values is adding to the market shifts. Corn prices are higher in light trade. Stock markets are lower, Dow Jones is 93 points lower while Nasdaq is down 3 points.

LIVE CATTLE:

Open: Mixed. Firm gains are seen early Wednesday morning in nearby live cattle trade. This may add even more uncertainty to the complex as traders are moving in the exact opposite direction of Tuesday's prices. Support in nearby trade is currently being offset by narrow losses in deferred contracts. This may limit additional longer term support from moving back to the market when volume increases through the morning. Cash cattle activity is undeveloped early Wednesday morning. For the most part, cash cattle trade is at a standstill with bids and asking prices expected to become more available as the day continues. A handful of cattle were reported sold in Nebraska Tuesday afternoon at $126 per cwt. But this is not enough to establish a trend or even get the ball moving at this point. Asking prices are likely to be seen at $130 live basis and $202 and higher dressed, but there continues to be a lot still needing to be done before active trade develops. Open interest Tuesday gained 2,001 positions (367,275). Spot February lost 797 positions (14,383) and April contracts slipped 340 positions (148,131). DTN projected slaughter for Wednesday is 118,000 head.

FEEDER CATTLE:

Open: Mixed. Early trade in feeder cattle futures is holding prices steady to 20 cents per cwt in most contracts, although late summer markets have been able to sustain single digit gains. The overall tone of the market remains slightly bearish given the inability to capitalize on the early week buying activity and concerns that beef market fundamentals may still remain weak in the near future. Narrow trading ranges are likely to define most morning trade, with no significant news expected across the industry through the day. Cash index for 2/12 is listed at $147.57, down 0.06. Open interest Tuesday slipped 17 positions (55,568).

LEAN HOGS:

Open: Mixed. Limited market direction is seen once again with traders holding prices in a tight but mixed range at opening bell. The ability to draw light support back to the front-month February futures contracts is helping to spark some underlying pressure in the rest of the market. Most contracts are steady to 25 cents per cwt lower. This could limit longer-term trade activity in the near future and may spark some underlying liquidation as traders continue to back away from Monday's gains. Cash hog trade Wednesday is expected steady to $1 lower. Most bids are expected to be $1 lower. Open interest Tuesday added 2,571 positions (235,785). Spot month February liquidated 462 positions (8,263) and April lost 266 positions (94,822). Cash lean index for 2/12 is $74.30, down 0.42. DTN projected slaughter for Wednesday is expected to be 465,000 head. Saturday runs are expected at 82,000 head.

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

(SK)

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