DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed trade has developed across livestock trade as traders quickly react to the aggressive early week moves in lean hog and feeder cattle futures. Even with triple-digit losses developing in lean hog futures, this is still considered position taking as the firm market undertone remains following Monday's rally. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 107 points higher with Nasdaq up 42 points.

LIVE CATTLE:

Open: Mixed. Early nearby gains have quickly moved into the live cattle complex as traders take advantage of early week buyer support. This is for increased underlying support to develop in the entire market as traders back away from technical shifts higher in feeder cattle and hog futures and move back to firming fundamental gains in nearby live cattle trade. Limited losses are developing in deferred contracts as concern of sustained long term beef support is eroding price levels slightly Tuesday morning. Cash cattle activity remains undeveloped with bids and asking prices still hard to find. It is likely that cash trade will be pushed off until the second half of the week. Open interest Monday added 1,673 positions (384,445). Spot month February contracts slipped 3,310 positions (24,243) and April contracts added 968 positions (164,913). DTN projected slaughter for Tuesday is 118,000 head.

FEEDER CATTLE:

Open: Mixed. Follow-through buyer support is slowly trickling into the market following strong gains Monday. The ability to push prices higher early in the week is bringing a mix of follow-through buyer support and position squaring in the initial minutes of trade. This may limit additional market direction through the morning as narrow trading ranges could hold through the entire Tuesday session. Outside market moves are expected to have a significant impact in the direction of feeder cattle futures through the week. Cash index for 2/1 is listed at $141.01 down $0.85. Open interest Monday fell 1,569 positions (49,458).

LEAN HOGS:

Open: 10 to 90 cents lower. Moderate pressure is developing in lean hog trade early Tuesday morning as traders are trying to adjust to the sharp gains seen Monday. Although the underlying firming tone seems to be holding, the aggressiveness as which prices shifted higher is causing some concern. Markets may find some needed stability once the initial position covering flows through the morning in the first hour of trade. Cash hog trade is steady to $1 lower. Most bids are steady to 50 cents lower. Open interest gained 2,415 positions (223,074). February lost 1,491 positions (17,640) and April added 718 positions (94,359). Cash lean index for 2/1 is $57.43 up $0.23. DTN projected slaughter for Tuesday is 477,000 head. Saturday runs are expected near 214,000 head.

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

(BAS)

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