DTN Before The Bell-Livestock

GENERAL COMMENTS

Limited trade activity is seen through all markets early Monday morning with prices mixed in a very narrow range. Lean hog futures are testing support levels and contract lows through the morning while a combination of position squaring in cattle trade, and short covering in hog markets is the priority of traders through early morning trade. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 20 points higher with Nasdaq up 18 points.

LIVE CATTLE:

Open: Steady to 20 cents lower. Limited trade is seen Monday morning with trades adjusting positions following the sharp recent market surge. Even though the tone of the market remains extremely firm, traders are eagerly taking positions in the event that additional support may develop as nearby contracts near contract highs. The focus on potential government shutdown looming at the end of the week is expected to bring some underlying uncertainty and anxiety to the market. This may add some increased volatility as traders not only focus on how consumer buying will react, but trade levels may turn more volitile. Cash cattle interest remains undeveloped with show list distribution and inventory taking priority through the morning. Open interest Friday added 2,850 positions (387,165). Spot month February contracts slipped 1,392 positions (19,543) and April contracts fell 1,010 positions (166,940). DTN projected slaughter for Monday is 118,000 head.

FEEDER CATTLE:

Open: Mixed. Initial light buyer support moving into feeder cattle futures has slowly started to erode through the first few minutes of trade. This may limit follow-through support seen through the complex as trades focus on the early pressure in live cattle trade. The limited moves in grain trade is likely to keep prices contained to a narrow trading range through most of the morning. Cash index for 2/7 is listed at $141.81 up $0.28. Open interest Friday added 296 positions (48,177).

LEAN HOGS:

Open: Mixed. Narrow trading ranges have been seen early Monday with the underlying bearish tone of the market still extremely obvious. Follow-through pressure is developing in April contracts with prices 10 cents lower as markets are reaching long-term support levels and contract lows through the morning. All other nearby trade is holding narrow gains as limited short covering is trying to develop due to the previous market liquidation. The hope that additional stability will move back into the complex is allowing for increased volatility through the rest of the day. Cash hog trade is steady to $1 lower. Most bids are steady to 50 cents lower. Open interest added 4,261 positions (228,917). February lost 1,521 positions (11,823) and April added 2,638 positions (93,694). Cash lean index for 2/7 is $56.89 down $0.27. DTN projected slaughter for Monday is 442,000 head.

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

(BAS)

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