DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate to firm losses have quickly redeveloped in the cattle complex. But there seems to be a growing sense of trying to reign in the aggressive triple-digit losses seen Wednesday, which could lead to more moderate pressure through the end of the week. Hog trade remains mixed in a narrow to moderate range, although the tone of the complex is sluggish. Corn prices are lower in light trade. Stock markets are higher, Dow Jones is 220 points higher while Nasdaq is up 51 points.

LIVE CATTLE:

Open: 50 to 70 cents lower. Limited trade activity is seen through the market, although the overall tone of the complex remains sluggish. There is growing weakness in all contracts following the sharp losses seen Wednesday. But there seems to be an attempt by buyers to slowly stick their toes in the water, which could crease some stability in the market through the end of the week. Cash prices were seen at $128 live basis and mostly $203 dressed. This is $2 per cwt lower than last week, and may be enough to set the weaker tone for the complex. Although additional volume is needed, it is uncertain if feeders will now still wait until direction from the cattle on feed report is seen Friday. Open interest Wednesday liquidated 2,015 positions (372,530). Spot February lost 3,363 positions (4,546) and April contracts slipped 911 positions (144,556). DTN projected slaughter for Thursday is 117,000 head.

FEEDER CATTLE:

Open: Steady to $1 lower. Moderate to strong follow-through pressure is quickly seen in feeder cattle markets. Given the aggressive losses seen midweek, it is uncertain if increased widespread liquidation will develop once again through midmorning like was seen Wednesday, or if traders will try to find some stability over the next couple of hours. Even with the current market losses, the complex has not technically shown market weakness as prices are still above short-term support levels and could spend considerable time hovering in the wide sideways market pattern. Cash index for 2/20 is listed at $147.99, down 0.12. Open interest Wednesday fell 591 positions (57,076).

LEAN HOGS:

Open: Mixed. Light pressure is seen in nearby contracts as the softness in cattle trade continues and is starting to affect the mentality and direction of the hog complex. Losses remain narrow, but the lack of follow-through support may pressure the rest of the complex to follow in the lower direction through the remainder of the morning. Cash hog trade Thursday is expected steady to $1 lower. Most bids are expected to be steady to 50 cents lower. Open interest Wednesday gained 2,218 positions (229,383). Spot month April added 623 in positions (91,633) and June gained 620 positions (47,366). Cash lean index for 2/20 is $70.78, down 0.63. DTN projected slaughter for Thursday is expected to be 465,000 head. Saturday runs are expected at 135,000 head.

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

(SK)

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