DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures have remained generally weak early Thursday morning. The overall lack of support in the complex continues to add uncertainty to the entire market. There is growing pressure in lean hog trade as the focus on readily available market ready hogs has significantly eroded any early-week support in the futures complex. Corn markets are lower in light early trade. Stock markets are lower. Dow Jones is 193 points lower with Nasdaq down 72 points.

LIVE CATTLE:

Open: Steady to 10 cents lower. Light price pressure is seen in live cattle trade Thursday morning. The inability to bring additional pressure to the complex has allowed for increased market stability in live cattle trade, and the potential for higher prices during the morning after initial sell orders have worked through the complex. This may add even more underlying support to the entire complex although light volume may keep markets moving in a narrow pattern through most of the trading day. Cash cattle bids are becoming more evident Thursday morning with packers offering $121 live in Texas and $196 dressed in Nebraska. At this point, bids are still a world apart from asking prices of $126 and higher live and $200 to $203 dressed. It may be Friday before active trade develops unless a major shakeup is seen in futures trade or outside markets. Open interest Wednesday added 1,029 positions (387,452). Spot-month February contracts slipped 1,842 positions (20,935) and April contracts added 1,552 positions (168,147). DTN projected slaughter for Thursday is 117,000 head.

FEEDER CATTLE:

Open: Mixed. Trade in the feeder cattle market Thursday morning is showing the only positive movement of all livestock trade with light to moderate gains seen in nearby contracts. The recent market pressure has allowed for short covering to develop as traders point to the expectation that firm beef demand is still expected through the spring months. The inability for grain markets to show significant market support through early February is also starting to help redevelop slow but steady support in feeder cattle trade. Cash index for 2/5 is listed at $141.53 down $0.01. Open interest Wednesday fell 307 positions (48,644).

LEAN HOGS:

Open: Mixed. Moderate pressure is quickly developing in nearby trade early Thursday morning with April contracts holding 77-cent losses. This is testing last week lows of $60.12 per cwt, adding to concerns that the underlying bearish fundamental pressure of growing supplies will not be able to sustain early week gains. Even though production levels are expected to be cut due to the latest round of cold and snowy weather moving through the country, the focus on growing supplies of market ready hogs is adding concern to the entire complex. Cash hog trade is steady to $1 lower. Most bids are steady to 50 cents lower. Open interest added 49 positions (221,144). February lost 1,938 positions (14,443) and April added 393 positions (93,266). Cash lean index for 2/5 is $57.16 down $0.20. DTN projected slaughter for Thursday is 467,000 head. Saturday runs are expected near 214,000 head.

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

(BAS)

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