DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm market pressure in lean hog trade is focusing on the overall lack of trade volume Friday morning. The price pullback following firm gains earlier in the week is a combination of position taking and fundamental uncertainty developing in the complex. Cattle futures are moving steadily higher, although the limited trade activity seen Friday has limited aggressive market shifts. Corn markets are higher in light early trade. Stock markets are lower. Dow Jones is 154 points lower with Nasdaq down 35 points.

LIVE CATTLE:

Open: Steady to $0.50 higher. Firm early morning support is seen in live cattle trade Friday morning. This is helping to build additional underlying support following the market stability seen over the last couple of sessions. If current market strength continues through the end of the session, front-month futures will be able to set contract highs once again, likely bringing about increased buyer support in the near future. The market remains fundamentally supported, although traders are closely watching the direction of cash business at the end of the week. Cash cattle activity remains sluggish Friday morning with just a few live bids seen at $120 in Texas. Packers are expected to show more bids through the morning, although at this point it is expected there will remain a wide gap between morning bids and current asking prices that will need to be resolved by the end of 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 Thursday added 1,649 positions (384,775). Spot month February contracts slipped 10,342 positions (94,641) and April contracts gained 6,089 positions (131,546). DTN projected slaughter for Friday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Narrow gains have trickled into feeder cattle futures with traders focusing on the firm support through live cattle trade. It is likely that feeder cattle markets will continue to hover in a narrowly traded range through most of the morning as traders try to adjust to the recent market shifts over the last week. Cash index for 1/09 is listed at $145.55 down $0.15. Open interest Thursday gained 257 positions (51,083).

LEAN HOGS:

Open: $0.50 to $1 Lower. Early trade has quickly added uncertainty to the lean hog futures complex as traders have quickly pulled back from recent market gains late in the week. The underlying pressure is most active in front month February futures with prices holding losses just above $1 per cwt through the first few minutes of trade. At this point, it is way too early to jump to conclusions and expect strong follow through pressure, as end of the week adjustments may be the limit to the renewed pressure. But the lack of fundamental support seen through the last half of the week, is creating increased caution through the entire complex. Cash hog trade is steady to $0.50 higher. Most bids are steady. Open interest fell 4,399 positions (207,706). February fell 9,303 positions (51,288) and April added 3,866 positions (68,004). Cash lean index for 1/09 is $55.99 up 0.89. DTN projected slaughter for Friday is 475,000 head. Saturday runs are expected at 190,000 head.

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

(BAS)

Copyright 2019 DTN/The Progressive Farmer. All rights reserved.