DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate to strong gains have developed across the live cattle and feeder cattle market early Tuesday morning. The bounce back from pressure early in the week is helping to create a sense of stability in the market, although volatile market swings are likely to continue to be seen over the next couple of days. Corn prices are higher in light trade. Stock markets are mixed, Dow Jones is 10 points higher while Nasdaq is down 10 points.

LIVE CATTLE:

Open: 20 to 70 cents higher. Light support has slowly moved into the market with buyers focusing on the gains in feeder cattle as the main driver of the initial market push higher. This could add even more support to the entire complex, which may add even more gains through the week. The recent market shifts have allowed trade to be contained in a wide sideways market trend. This is likely to continue through the end of the month as traders look for increased underlying support from long-term demand. Cash cattle remains sluggish with very limited support seen early in the day. A few token bids have developed at $126 per cwt, which may start the ball rolling, although very little market expectations are focusing on trade developing any time soon. Open interest Monday added 2,879 positions (377,282). Spot February lost 1,225 positions (1,609) and April contracts slipped 457 positions (141,653). DTN projected slaughter for Tuesday is 118,000 head.

FEEDER CATTLE:

Open: Steady to 70 cents higher. Firm support is quickly developing in the opening minutes of trade. This may add even more support later in the day as traders are trying to cover short positions seen over the last couple of sessions. This may help to draw additional underlying buyer activity into the market. Although early activity is sometimes hard to measure, the fact that month end is quickly approaching may add even more uncertainty to the recent market shifts. Cash index for 2/21 is listed at $148.05, up 0.06. Open interest Monday added 546 positions (57,581).

LEAN HOGS:

Open: Mixed. Narrow trading ranges are likely to be seen through most of the morning following very sluggish moves at opening bell. Nearby contracts are contained to single digit moves early in the session which could limit volatility through the rest of the complex. Cash hog trade Tuesday is expected steady to $1 lower. Most bids are steady. Open interest Monday fell 716 positions (228,783). Spot month April fell 1,931 in positions (86,187) and June gained 617 positions (48,878). Cash lean index for 2/21 is $70.17, down 0.61. DTN projected slaughter for Tuesday is expected to be 463,000 head. Saturday runs are expected at 118,000 head.

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

(SK)

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