DTN Before The Bell-Livestock

Pressure Redevelops in Hog Futures

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

Livestock futures are expected to remain lightly traded early Friday morning with moderate to strong losses developing across the lean hog complex. There remains mixed market moves early Friday morning in live cattle trade as prices have been contained in a narrow range, although weaker feeder cattle trade is adding caution to the entire complex. Corn markets are steady in light early trade. Stock markets are higher. Dow Jones is 220 points higher with Nasdaq up 64 points.

LIVE CATTLE:

Open: Mixed. Light trade is expected to slowly develop across the live cattle complex through the entire morning. There is growing movement through nearby contracts as traders continue to focus on increased buyer activity over the upcoming days. With firm gains still focused in feeder cattle, end-of-week positioning is being done in all live cattle contracts with traders closely watching cash market direction and beef cutout values. Cash cattle bids are starting to become more aggressive with live bids seen in all areas with prices hovering from $121 to $123 per cwt. Dressed bids are steady to firm with previous days with bids in the North at $196 to $197 per cwt. This is still a long distance from asking prices, which remain firm from previous days at $126 and higher live and $200 to $203 dressed. It may be afternoon before cash deals get done. Open interest Thursday slipped 979 positions (387,550). Spot month February contracts slipped 4,252 positions (50,090) and April contracts added 681 positions (155,714). DTN projected slaughter for Friday is 118,000 head.

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FEEDER CATTLE:

Open: Steady to 30 cents lower. Narrow losses have trickled into feeder cattle trade with traders focusing on overall buyer activity through the entire complex. There is growing uncertainty through the end of the week concerning further advances in feeder cattle prices without firm support redeveloping across live cattle trade. If losses remain contained to current 10 to 20 cent losses through the morning, the potential remains strong for late-day buyer support moving through the complex before the end of the session. Cash index for 1/23 is listed at $142.24 up $0.66. Open interest Thursday fell 385 positions (51,062).

LEAN HOGS:

Open: $1 to $1.50 lower. Strong follow-through selling pressure is moving into nearby and deferred contracts Friday morning. The shift below short-term support levels seen earlier in the week has added increased liquidation activity to the entire complex. There is growing uncertainty through the complex, which may spark increased triple-digit losses before the end of the week as February futures have moved below $60 per cwt. This latest round of market weakness is likely to add even more bearish fundamental activity to cash and wholesale pork products through the end of the month. Cash hog trade is steady to $1 lower. Bids appear to be scattered through this range through the morning. Open interest added 2,787 positions (209,946). February fell 1,380 positions (25,488) and April added 1,965 positions (86,481). Cash lean index for 1/23 is $58.50 down 0.08. DTN projected slaughter for Friday is 473,000 head. Saturday runs are expected to be 212,000 head.

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

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Rick Kment