DTN Before The Bell-Livestock

Hog Futures Rally

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

Strong gains in lean hog futures trade early Wednesday morning has stolen the spotlight with February futures leading the complex higher with triple-digit gains. Limited activity is seen across cattle trade with mixed to mostly lower trade seen in live cattle markets during opening trade activity. Corn markets are mixed in light early trade. Stock markets are lower. Dow Jones is 223 points lower with Nasdaq down 63 points.

LIVE CATTLE:

Open: Mixed. Despite the early pressure in feeder cattle trade, live cattle futures are holding narrowly mixed market levels early Wednesday morning. Although recent market support continues to focus on growing beef demand through early 2019, the concern that markets may erode over the near future due to recent buyer support needing a market correction. February futures have officially taken over as spot month contracts, holding prices near $124 per cwt as traders continue to focus on firm beef demand growth through the first half of 2019. Cash cattle markets remain quiet Wednesday morning with just a few starting asking prices of $125 seen in the south. Packer interest is expected to improve over the next couple of days, but active trade may not develop until Friday. Open interest Monday increased 6,392 positions (376,468). Spot month February contracts lost 752 positions (134,357) and April contracts gained 4,103 positions (111,468). DTN projected slaughter for Wednesday is 118,000 head.

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FEEDER CATTLE:

Open: 30 to 80 cents lower. Limited support is seen Wednesday morning in cattle trade with feeder cattle carrying the weight of trader uncertainty as prices shift firmly lower in the first few minutes of trade Wednesday morning. Although little has changed in the overall direction of the cattle complex, the firm gains which developed during late December is causing limited market correction as traders try to adjust for the weeks and months ahead. Cash index for 12/28 is listed at $144.64 down $2.62. Open interest Monday fell 105 positions (48,048).

LEAN HOGS:

Open: 50 cents to $1.50 higher. A combination of firming cash hog bids during the first trading day of 2019, and expected longer term pork demand support is helping to spark renewed buyer interest Wednesday. Increased trade volume has moved back into the complex, allowing for additional longer term support through the entire complex, although traders are looking for the ability to push higher price levels to nearby contracts, allowing for triple-digit gains to expand through the trading session Wednesday. Cash hog trade is steady to $1.00 higher. Most bids are steady to 50 cents higher. Open interest added 6,916 positions (218,056). February added 3,237 positions (82,177) and April gained 2,625 positions (57,545). Cash lean index for 12/28 is $53.23 up 0.10. DTN projected slaughter for Wednesday is 477,000 head. Saturday runs are expected at 420,000 head.

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

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Rick Kment