DTN Before The Bell-Livestock

GENERAL COMMENTS

Light pressure is seen in cattle trade early Wednesday morning. This may add some additional volatility through the end of the week. Hog futures may add some increased pressure through the session, although firm gains have quickly developed. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 140 points higher with Nasdaq up 39 points.

LIVE CATTLE:

Open: Steady to $0.30 lower. Traders are trying to adjust to the sharp gains seen Tuesday. This is allowing for a narrow market correction, although the overall tone of the market remains firm due to the limited softness in prices Wednesday morning. Traders are focusing on outside market direction, which could spark some additional price support later in the session. Cash cattle markets are still quiet, but packer interest should start to slowly improve through the day. Active trade is not expected to be seen until late in the week. Open interest Tuesday fell 1,591 positions (385,772). Spot month February contracts slipped 4,514 positions (124,900) and April contracts gained 2,207 positions (118,070). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Open: $0.30 to $0.50 lower. Light pressure is seen early Wednesday as traders react to the aggressive triple-digit gains seen early in the week. Most of the pressure is due to position taking, as traders may focus on additional buyer support later in the week. Trade volume is likely to improve through the rest of the session, bringing more activity to the complex. Cash index for 1/04 is listed at $146.06 up $0.46. Open interest Tuesday gained 1,538 positions (50,100).

LEAN HOGS:

Open: $0.20 to $0.70 higher. Firm gains have continued to develop in lean hog trade during the first few minutes of trade activity Wednesday. The focus on additional cash market support is expected to help draw more trade to the complex. Cash hog trade is steady to $1.00 higher. Most bids are 50 cents higher. Open interest liquidated 9,872 positions (212,515). February fell 11,377 positions (66,576) and April fell 1,124 positions (60,147). Cash lean index for 1/07 is $54.50 up 0.87. DTN projected slaughter for Wednesday is 477,000 head. Saturday runs are expected at 195,000 head.

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

(BAS)

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