DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm pressure is seen through cattle trade Tuesday morning with increased weakness developing across the entire feeder cattle trade. Triple-digit losses in feeder cattle prices is adding to the overall concern of live cattle markets able to sustain recent market support. Hog futures are firmly higher, but starting to see limited support following the building pressure through cattle markets. Corn markets are lower in light early trade. Stock markets are lower. Dow Jones is 163 points lower with Nasdaq down 73 points.

LIVE CATTLE:

Open: 50 cents to $1 lower. Early pressure in feeder cattle trade has quickly and aggressively pulled any buyer support out of the market in the opening minutes of live cattle futures Tuesday. Even though prices still remain at the top end of the trading range following contract highs last week, the growing weakness seen through the feeder cattle complex is adding even more uncertainty to the entire market. Cash cattle interest is undeveloped early Tuesday morning with asking prices and bids still unavailable. It is expected that trade will be pushed off until the last half of the week, with very little interest in asking prices or bids until Wednesday or later. Open interest Friday gained 4,454 positions (392,181). Spot month February contracts slipped 2,795 positions (62,187) and April contracts added 2,645 positions (153,698). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: $1 lower. Strong pressure has redeveloped in early week trade as trades seem intent to quickly adjust away from end of the week support seen Friday. The underlying weakness in feeder cattle trade seen through the first couple of weeks of January is sparking additional pressure and testing support levels in nearly all contract months. There is also increased focus on the direction of grain trade, as higher grain and feed prices has a significant impact on production costs, and what feeders are willing to pay for feeder cattle. Cash index for 1/17 is listed at $142.05 down $1.04. Open interest Friday gained 1,051 positions (51,767).

LEAN HOGS:

Open: Steady to $0.70 higher. Follow-through buyer support is quickly moving into nearby contracts following the long weekend, although very limited activity is seen in the complex during initial trade. This could allow steady buyer support to build on the gains seen late last week as traders try to rebuild longer market interest after posting multi-month lows over the past week. Limited trade is expected as the day continues, although the firmer tone seems to be well rooted at this point. Cash hog trade is $1 lower to 50 cents higher. Most bids are steady to firm. Open interest fell 800 positions (204,752). February fell 3,020 positions (30,728) and April added 1,353 positions (80,763). Cash lean index for 1/18 is $57.99 down 0.17. DTN projected slaughter for Tuesday is 477,000 head. Saturday runs are expected to be 202,000 head.

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

(BAS)

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