DTN Before The Bell-Livestock

GENERAL COMMENTS

Light losses are seen in cattle and hog futures with the cattle complex leading the market lower with 30 to 50 cent losses. This is adding some limited uncertainty to the complex due to traders not focusing on expanding recent gains. Hog futures are mixed with nearby contracts slowly adjusting to recent gains with limited morning losses, while continued buying develops in deferred trade. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 117 points higher with Nasdaq up 32 points.

LIVE CATTLE:

Open: Steady to 60 cents lower. Commercial selling is slowly stepping into nearby live cattle trade with nearby contracts holding moderate losses in the opening minutes of trade. This is allowing for increased underlying concerns that recent gains will be unable to hold in the near future. But with prices still near contract highs, there is a lot of support and good will still held in the cattle complex. Given the gains over the past couple of weeks, prices could easily wander within a $1 to $1.50 per cwt trading range without hitting support levels and triggering a market reversal. Cash cattle interest is still sluggish with bids not redeveloping at this point. A few asking prices have started to surface at $127 to $128 live basis, and $203 to $205 dressed. The firm moves in cash trade last week and underlying strength in futures trade is keeping feedlot managers focusing on strong upward market potential. Open interest Tuesday slipped 1,708 positions (389,101). Spot month February contracts lost 3,192 positions (13,361) and April contracts fell 1,049 positions (165,066). DTN projected slaughter for Wednesday is 114,000 head.

FEEDER CATTLE:

Open: Steady to 50 cents lower. Light selling pressure is seen in feeder cattle trade following the lack of price support in live cattle trade. The market still remains focused on underlying strength seen across the entire complex, but traders are looking for renewed support and potential for market stability through the next few days. Even though corn markets remain steady Wednesday morning the swift gain seen Tuesday is causing some underlying concern of elevated feed prices which erodes feeder cattle support. Cash index for 2/11 is $141.68 down $0.05. Open interest Tuesday added 516 positions (48,823).

LEAN HOGS:

Open: Mixed. Limited market direction is seen early Wednesday morning with traders focusing on a combination of follow-through buying activity in deferred contracts, while nearby contracts are holding limited losses following the sharp market rally Tuesday. The tone of the market is starting to firm after the extended downturn that has tested summer 2018 lows. It is likely that even though little has changed fundamentally in the hog complex, technical support is starting to redevelop as traders build on early week gains. Cash hog trade is steady to $0.50 lower. Bids are scattered through the range. Open interest gained 2,182 positions (235,658). February lost 771 positions (10,332) and April fell 2,040 positions (95,868). Cash lean index for 2/11 is $55.91 down $0.23. DTN projected slaughter for Tuesday is 465,000 head. Saturday runs are projected at 211,000 head.

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

(BAS)

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