DTN Before The Bell-Livestock

GENERAL COMMENTS

Cattle and hog futures have posted mixed trade early Friday as traders try to step in and bring some stability following the sharp losses Thursday afternoon. There is expected to be very limited additional market direction developing as prices should remain range bound through the end of the week. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 116 points higher with Nasdaq up 6 points.

LIVE CATTLE:

Open: Mixed. Light buyer support is slowly trickling into live cattle trade Friday morning. This is limiting buyer support from 10 to 20 cents per cwt in most contracts as traders continue to back away from previous losses. The underlying tone of the market remains firm, although the price correction seen Thursday was not totally a shock given the strong rally seen over the last couple of weeks. Trade is expected to remain limited through the day Friday although market positioning is likely to be done in a narrow to moderate range. Cash cattle bids are becoming more available, but the tone of the market remains weak with live bids at $121 per cwt while dressed bids are developing at $195 to $196 per cwt. Asking prices are redeveloping, with prices set at $125 to $126 live and $200 to $203 dressed. Trade should take place at some point Friday. Open interest Thursday increased 2,272 positions (388,766). Spot month February contracts slipped 3,544 positions (37,227) and April contracts added 2,486 positions (164,156). DTN projected slaughter for Thursday is 118,000 head.

FEEDER CATTLE:

Open: Mixed. Light activity is expected to continue to be seen through most of the morning with prices mixed to mostly lower as follow through pressure is developing following Thursday's triple-digit loss. The underlying tone of the market is starting to weaken as traders are focusing on the potential for firm buying moving into grain trade, which will affect overall production costs, and reduce overall feeder cattle price levels. Cash index for 1/30 is listed at $141.79 down $0.98. Open interest Thursday lost 236 positions (51,157).

LEAN HOGS:

Open: Mixed. Narrow trading ranges are seen on the first trading session of February with mixed prices focusing on follow-through light pressure in nearby contracts, while short covering in deferred contracts is regaining buyer support after the aggressive price tumble late Thursday. Limited volume is expected through most of the day, although market volatility could develop over the next couple hours based on previous market swings. Cash hog trade is steady to $1 lower. Bids are scattered through the range. Open interest gained 2,272 positions (217,848). February lost 740 positions (22,228) and April added 1,247 positions (90,558). Cash lean index for 1/29 is $57.67 down $0.22. DTN projected slaughter for Friday is 470,000 head. Saturday runs targeted at 310,000 head.

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

(BAS)

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