DTN Before The Bell-Livestock

GENERAL COMMENTS

Narrow trading ranges are seen in cattle and hog futures trade following mixed market activity Tuesday morning. Although the cattle market remains firm, and hog market is still bearish, the focus on position adjustments Tuesday is limiting market direction. The extreme cold weather conditions are taking a priority with challenges in keeping animals on feed as well as transportation issues expected to be a major challenge through most of the week. Corn markets are lower in light early trade. Stock markets are mixed. Dow Jones is 114 points higher with Nasdaq down 13 points.

LIVE CATTLE:

Open: Mixed. Most nearby live cattle contracts are trading within a single-digit trading range. This is limiting additional market uncertainty through the complex. The underlying firmness in the market seen over the last several trading sessions is helping to slowly bring additional commercial traders to the complex. At this point, prices remain within the recent trading range, but prices are inching higher, with some eyeing contract highs once again in April futures. This move could shift the overall tone of the market at the end of the month, bringing in commercial and investment buying to the complex. Cash cattle markets remain sluggish with asking prices and bids undeveloped. Markets are expected to remain quiet until the second half of the week. Open interest Monday increased 1,248 positions (388,417). Spot-month February contracts slipped 2,614 positions (43,980) and April contracts added 1,544 positions (159,551). DTN projected slaughter for Tuesday is 117,000 head.

FEEDER CATTLE:

Open: Mixed. Limited activity is expected to be seen in all feeder cattle trade with prices mixed in initial trade from 20 cents lower to 30 cents higher. Following the strong gains Monday, the tone of the market is firming, although traders seem to be unwilling to actively move into the complex at this point. Many traders are closely following moves in live cattle trade as well as the potential to shift outside markets lower through the next couple of days. Cash index for 1/25 is listed at $143.66 up $0.45. Open interest Monday added 482 positions (51,856).

LEAN HOGS:

Open: Mixed. Moderate pressure is still developing in nearby contracts in the opening minutes of trade, but limited buyer support which slowly but steadily moved into deferred contracts appears to be gaining momentum through the morning. Although the tone of the market still remains bearish, short covering is likely to be a major factor through the Tuesday session. Overall hog movements and plant activity is still uncertain through the next few days with the cold weather limiting overall hog and pork movements. Transportation issues are likely to be the main hurdle through the next couple days with temperatures in sub-zero ranges in many areas of the Midwest. It is reported that some trucking companies are limiting hauling schedules in order to maintain animal safety and not risk equipment failure due to the extreme cold temperatures. This will likely back up market ready hogs over the next few days, and limit plant outputs. Cash hog trade is steady to $1 lower. Most bids remain steady. Open interest added 840 positions (214,583). February gained 802 positions (25,141) and April added 662 positions (88,825). Cash lean index for 1/25 is $58.22 down $0.28. DTN projected slaughter for Tuesday is 475,000 head. Plant schedules through the rest of the week are uncertain based on the weather and cold temperatures.

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

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