DTN Before The Bell-Livestock

Mixed Live Cattle Futures Develop Thursday

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

Initial trade is mixed to mostly lower early Thursday morning. An attempt to cover sharp losses in the cattle market has drawn limited buyer activity back into the live cattle complex during the first minutes of trade. The weaker tone seen in all livestock markets is expected to continue through the session, although prices could chop around in a narrow to moderate range. Corn prices are steady to lower in light trade. Stock markets are lower, Dow Jones is 248 points lower while Nasdaq is down 68 points.

LIVE CATTLE:

Open: Mixed. Short covering is attempting to step into the market, which is holding several contracts steady to 20 cents per cwt higher early Thursday morning. The aggressive losses over the last week in all contract months has left cattle futures in a bearish tone. This is not expected to change over the near future, although there continues to be an attempt to cover positions through the rest of the week. Prices are mixed in a narrow range, from 10 cents lower to 20 cents higher in the initial minutes of trade. Cash cattle activity remains sluggish Thursday morning following trade in the North Wednesday at $200 to $203 dressed basis and $125 to $126 live. Prices are generally $1 to $2 per cwt lower than last week's levels in most areas, but consistent with trade seen earlier in the week. It is expected that some clean up trade will develop, and may hold off until late Friday. But the tone of the market has been set unless a major development is seen in futures trade over the next couple of days. Open interest Wednesday lost 985 positions (355,477). Spot month April contracts lost 3,868 positions (52,537) and June contracts added 479 positions (158,420). DTN projected slaughter for Thursday is 118,000 head.

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FEEDER CATTLE:

Open: Steady to 50 cents lower. Follow-through selling is quickly developing across feeder cattle markets. The break away from buyer activity seen midweek and prices closing with triple-digit losses, has caused even more concern through the entire complex. There is the expectation that traders will continue to push prices lower as very limited support, if any, is likely to develop following the March 1 cattle on feed report, which will be released Friday afternoon. Traders are also getting ready for the Easter holiday which is expected to limit trade activity most of next week. Cash index for 3/20 is listed at $140.95 down 0.30. Open interest Wednesday added 935 positions (53,502).

LEAN HOGS:

Open: Mixed. For the third trading session in a row, lean hog futures have opened in a mixed to mostly trading range as traders continue to try to build some market stability, but are hampered by widespread fundamental pressure as well as increased concerns from commercial and investment traders. Most contracts are holding losses of 30 to 60 cents per cwt as the overall lack of buyer support is causing some underlying pressure through the entire complex. Cash hog trade Thursday is expected 50 cents to $1 lower. Most bids are seen 50 cents per cwt lower. Open interest Wednesday fell 2,079 positions (232,186). Spot month April fell 3,081 in positions (30,587) and June gained 1,050 positions (91,469). Cash lean index for 3/20 is $63.63, down 0.66. DTN projected slaughter for Thursday is expected to be 462,000 head. Saturday runs are expected to hit 112,000 head.

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

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Rick Kment