DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate to firm gains have moved into lean hog trade as follow-through buying is developing from commercial and noncommercial traders after shifting prices higher Monday. The ability to keep prices from setting contract lows in April futures and defending long-term lows Monday is being seen as a significant feat, allowing for renewed support to quickly develop. Cattle trade is sluggish with prices mixed to mostly lower Tuesday morning. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 249 points higher with Nasdaq up 71 points.

LIVE CATTLE:

Open: Steady to 20 cents lower. Light pressure is seen in live cattle trade as traders enter the market extremely cautious while also attempting to take profits following setting contract highs once again Monday in most nearby contract months. Trade volume is expected to remain sluggish through the morning with most of the emphasis moving to the lean hog complex where traders are trying to establish a strong market rebound after defending long-term lows late Monday. Sluggish outside markets are also likely to limit the overall direction of the complex through the session, as prices hover in the top end of the trading range. Cash cattle activity is likely to remain undeveloped through most of the day with bids and asking prices still unavailable through the morning and likely not to develop until later in the week. Active trade is likely to be pushed off until late in the week once again. Open interest Monday added 1,885 positions (391,226). Spot month February contracts slipped 1,831 positions (16,553) and April contracts fell 665 positions (166,274). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Limited interest is seen in feeder cattle trade with prices hovering from 10 cents lower to 7 cents higher in limited activity Tuesday morning. There is renewed buyer support in corn trade early Tuesday morning, allowing for market softness to develop across several feeder cattle markets. Although traders remain focused on the underlying support seen in all cattle trade over the last several sessions, a swift move higher in grain trade could quickly spark firm pressure across all feeder cattle markets. Cash index for 2/8 is $141.73 up $0.04. Open interest Monday fell 103 positions (48,330).

LEAN HOGS:

Open: Mixed. Firm gains have quickly developed in spring and summer contracts Tuesday morning with April contracts moving 55 cents per cwt higher. The most aggressive support has developed in June through August contracts with increased underlying support seen across the complex as prices are holding 70 to 90 cents per cwt. The potential for renewed trade talks with China, as well as a tentative plan to keep the government from shutting down once again at the end of the week are all helping to firm buyer support following recent pressure. The market still remains weak with prices within striking ranges of contract lows, but the potential to build off of the market shift Monday is sparking additional interest Tuesday morning. Cash hog trade is steady to $0.50 lower. Most bids are $0.50 lower. Open interest gained 5,241 positions (233,527). February lost 528 positions (11,045) and April added 1,593 positions (97,912). Cash lean index for 2/8 is $56.14 down $0.39. DTN projected slaughter for Tuesday is 470,000 head. Saturday runs are projected at 118,000 head.

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

(BAS)

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