DTN Before The Bell-Livestock

GENERAL COMMENTS

Light to moderate pressure is redeveloping in livestock trade. Cattle markets are showing increased market pressure, which may add even more weakness to the complex. There is a sense that trade volume may be light through much of the session, limiting activity through the Tuesday trading session. Corn prices are lower in light trade. Stock markets are higher, Dow Jones is 104 points higher while Nasdaq is up 21 points.

LIVE CATTLE:

Open: Steady to 30 cents lower. Additional follow-through weakness is developing across live cattle trade. The sharp losses Monday combined with additional pressure quickly moving into the market has kept traders sluggish during early morning trade. This may add even more pressure to the market over the next couple of days. Cash cattle activity remains undeveloped early Tuesday morning. It is possible that asking prices will start to become more evident, but this may not increase the availability of bids. Just because trade started to develop this time early last week, does not mean that it will continue to be the case today. It is expected that most trade will be seen in the last half of the week, but the volatility in cattle futures and outside markets may spark some additional uncertainty over the next couple of days. Open interest Monday lost 1,709 positions (359,425). Spot month April contracts lost 4,441 positions (61,656) and June contracts added 185 positions (157,686). DTN projected slaughter for Tuesday is 116,000 head.

FEEDER CATTLE:

Open: Steady to 30 cents lower. The market intensity through the feeder cattle market remains much more subdued than early week trade on Monday. But pressure continues to develop with traders focusing on light but weaker trade in nearby contracts. The potential that additional selling pressure may quickly develop over the near future is adding even more concern to the entire livestock futures market. There is still a lot of focus on the direction of live cattle trade as well as outside markets through the rest of the week. This is likely to keep prices under pressure over the near future, but may draw additional volume to the market. Cash index for 3/16 is listed at $141.73 down 0.98. Open interest Monday fell 3 positions (51,612).

LEAN HOGS:

Open: Mixed. Initial movements in lean hog trade are mixed in a narrow range early Tuesday morning. But the tone of the market remains weak with prices likely to try to follow additional liquidation developing through much of the complex. Prices may be much more stable than the triple digit losses Monday, but overall, the lack of buyer support moving into the market may create additional uncertainty through the entire complex. Most of the focus continues to be placed on June contracts with very limited trade activity developing in April or May futures due to slipping open interest in April futures and extremely limited open interest in the May contract. This will continue to drive most trade activity through most of the spring with June futures holding a $14 per cwt premium to the April contracts. Cash hog trade Tuesday is expected 50 cents to $1 lower. Most bids are seen $1 per cwt lower. Open interest Monday added 2,530 positions (231,701). Spot month April added 41 in positions (34,217) and June gained 1,879 positions (87,762). Cash lean index for 3/16 is $64.97, down 0.55. DTN projected slaughter for Monday is expected to be 462,000 head. Saturday runs are expected to hit 108,000 head.

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

(SK)

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