DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures remain sluggish early Wednesday morning. Traders are searching for additional nuggets in order to gain the advantage following what has been a volatile week of trade in all livestock futures. The ability to hold support levels through the week is expected to be a major factor in longer-term market moves. Lean hog futures have developed narrow market losses with follow through pressure trickling into the complex following the pullback in prices Tuesday. Cattle futures are mixed in a narrow range with firm support in live cattle holding. Corn markets are lower in light early trade. Stock markets are lower. Dow Jones is 33 points lower with Nasdaq down 2 points.

LIVE CATTLE:

Open: Mixed. Initial price pressure developing in live cattle based on overall market inactivity has been replaced by single-digit gains in most contracts. Limited interest is developing early Wednesday, although the firming tone of the market has continued to develop as traders expect to see support in cash and beef cutout values through the end of the week. Limited outside market moves have kept traders focusing more on market fundamentals during the last couple of days. Cash cattle interest remains sluggish Wednesday morning with bids undeveloped so far during the day. There is starting to be a few asking prices trickling into the market with cattle initially priced at $126 to $127 per cwt live basis and $201 to $203 dressed. These asking prices are slightly elevated from prices the last couple of weeks as feeders look to take advantage of futures market support. Open interest Tuesday added 2,900 positions (386,763). Spot month February contracts slipped 1,214 positions (22,777) and April contracts added 2,034 positions (166,772). DTN projected slaughter for Wednesday is 118,000 head.

FEEDER CATTLE:

Open: Mixed. Light nearby gains quickly redeveloped in feeder cattle trade with the overall focus of traders shifting away from weakness seen Tuesday. Continued fundamental support in live cattle trade and lackluster activity in grain trade is allowing nearby contracts to test short term resistance levels of $146.10 per cwt through the morning in April contracts. If traders can close prices above these levels, follow through support is expected to develop later in the week based on April contracts potential to set 2019 highs. Cash index for 2/4 is listed at $141.54 up $0.53. Open interest Tuesday fell 458 positions (48,973).

LEAN HOGS:

Open: 5 to 50 cents lower. Light pressure has trickled into lean hog trade at opening bell with traders focusing on the pressure late Tuesday. It is likely that initial selling pressure may be shallow during the session as buyers are looking for an opportunity to step back into the complex. Nearby contracts are still trading 70 to 80 cents above support levels set last week. If these support levels are not able to hold, additional market bearishness is expected to quickly develop through the first half of February. Cash hog trade is steady to $1 lower. Most bids are steady to 50 cents lower. Open interest lost 1,947 positions (221,065). February lost 1,322 positions (16,318) and April slipped 1,486 positions (92,873). Cash lean index for 2/4 is $57.36 down $0.05. DTN projected slaughter for Wednesday 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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