DTN Before The Bell-Livestock

GENERAL COMMENTS

Light to moderate gains have slowly stepped back into the lean hog futures complex. This may add to the recent market surge seen in the lean hog market as traders continue to regain confidence based on the upward trend in the market through the month of April. Cattle trade remains mixed in a narrow range. Although the firm support over the last few days has helped to solidify buying activity across the complex, the focus on fundamental uncertainty is causing concern to some traders. Corn prices are lower in light trade. Stock markets are lower, Dow Jones is 85 points lower while Nasdaq is down 39 points.

LIVE CATTLE:

Open: Mixed. Trade Thursday morning has remained sluggish with prices hovering from 20 cents lower to 32 cents higher, despite the limited activity in the complex. Traders are not only focusing on the uncertainty in beef value and cash market trade seen through the week, but the general softness which appears to be moving into feeder cattle trade is also impacting all live cattle trade. The wide spread between April and June contracts, currently at $14 per cwt, remains the focus as more contracts shift to June futures through the rest of the month. This could add even more volatility to the market based on basis levels and overall long term direction. Cash cattle markets remain sluggish early Thursday morning with very limited activity expected to be seen during the first few hours of trade. With cattle selling in the North at $185 to $186 per cwt dressed basis for delayed delivery, there is some expectation that this may heavily influence overall market direction through the end of the week. But packers and feedlot owners are expected to be firmly planted in their positions for the most part and may wait until late in the week before activity develops. Open interest Wednesday gained 2,243 positions (346,892). Spot month April contracts lost 1,009 positions (9,848) and June contracts added 560 positions (153,376). DTN projected slaughter for Thursday is 117,000 head.

FEEDER CATTLE:

Open: Mixed. Narrow trading ranges are seen early Thursday morning with nearby contracts holding 2 to 35 cent losses due to concerns that recent market buying activity may be thinning. Deferred futures remain slightly higher as most fall and winter contracts holding a narrow, 10-cent-per-cwt gain. The overall lack of direction in the complex continues to bring some uncertainty not only to the feeder cattle trade, but all cattle markets through the complex. Cash index for 4/17 is listed at $137.90 up 0.15. Open interest Wednesday fell 350 positions (49,400).

LEAN HOGS:

Open: 10 to 40 cents higher. Narrow gains are trickling into the complex early Thursday morning with the focus on increased overall buyer support, which helped to solidify triple-digit gains midweek. The overall strength in the complex has continued to draw increased underlying activity in the market. It is uncertain at this point, if active follow through buying will redevelop across the complex, or if traders will continue to test the recent support in order to see if position taking will develop late in the week. Cash hog trade Thursday is steady to $2 higher. Most bids are $1 higher. Open interest Wednesday eroded by 3,495 positions (236,969). Spot month May added 28 positions (3,620) and June gained 115 positions (94,496). Cash lean index for 4/17 is $55.05, up 1.03. DTN projected slaughter for Thursday is expected to be 467,000 head. Saturday runs are pegged at 118,000 head.

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

(SK)

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