DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed trade is seen in cattle and hog futures early Thursday morning as traders focus on adjusting positions following midweek shifts, but are still focusing on longer-term market direction seen over the next several weeks. Corn markets are lower in light early trade. Stock markets are lower. Dow Jones is 106 points lower with Nasdaq down 59 points.

LIVE CATTLE:

Open: Mixed. Light trade in nearby and deferred live cattle futures is limiting the overall direction of the market and causing a combination of follow through pressure after narrow to moderate losses midweek, and allowing buyers to slowly move back into the complex. The focus on recent gains, is still allowing for a firm market undertone, which with only limited buyer support could cause prices to break higher, setting new contract highs. In order to bring buyers back to the market, volume has to increase through the morning, from the sluggishly traded market moves Thursday morning. Cash cattle markets remain undeveloped early Thursday morning with packer activity expected to improve through the day. Asking prices are redeveloping in the same range as seen earlier in the week with live cattle priced at $125 to $126 per cwt with dressed cattle at $200 and higher. It may be Friday before active trade develops. Open interest Wednesday added 103 positions (383,531). Spot month February contracts slipped 8,355 positions (105,127) and April contracts gained 3,941 positions (125,636). DTN projected slaughter for Thursday is 118,000 head.

FEEDER CATTLE:

Open: $0.10 to $0.30 lower. Limited follow through pressure is slowly trickling into the feeder cattle complex. There is increased uncertainty following the sharp early week gains in both live cattle and feeder cattle trade. Following the market rally, the overall tone of the market still remains firm, although the concern seen through the feeder cattle trade is if recent gains can be sustained given the expectation of still large cattle numbers available to the market over the next few months. This could curb short term buying activity over the next couple of weeks. Cash index for 1/08 is listed at $145.70 up $0.07. Open interest Wednesday gained 726 positions (50,826).

LEAN HOGS:

Open: Mixed. Limited trade volume is seen early Thursday with prices mixed to mostly lower as traders in summer and fall contracts are pulling back from previous gains. The concern that little to no clear trade direction is seen following the talks with China seem to have cooled market support in most contacts. Trade is expected to hover within a narrow range on either side of unchanged in nearby contracts with traders focusing on fundamental support while monitoring outside markets. Cash hog trade is steady to $1.00 higher. Most bids are steady to 50 cents higher. Open interest slipped 244 positions (212,515). February fell 5,966 positions (60,598) and April added 4,039 positions (60,598). Cash lean index for 1/08 is $55.10 up 0.35. DTN projected slaughter for Thursday is 477,000 head. Saturday runs are expected at 190,000 head.

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

(BAS)

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