DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm pressure is steadily moving into livestock trade as feeder cattle and lean hog markets are leading the complex lower. This is adding some renewed bearish undertones to the entire complex as traders are unwilling to hang onto previous gains. Corn markets are lower in light early trade. Stock markets are lower. Dow Jones is 188 points lower with Nasdaq down 28 points.

LIVE CATTLE:

Open: Steady to 80 cents lower. Continued market erosion has developed early Thursday morning as traders continue to adjust markets lower. Nearby contracts are holding narrow losses, while more aggressive pressure is seen through the deferred contracts. There may be some additional uncertainty through the complex Thursday as traders are caught between expected cash market firmness, and sluggish support in beef values. Cash cattle remain quiet early Thursday morning with a few bids are redeveloping in Texas at $122 per cwt. These prices are not expected to get any more attention than the previous day, allowing both sides to look for more direction and developments later in the week. Asking prices are holding at $126 and higher live and $203 to $205 dressed. Open interest Wednesday slipped 594 positions (388,084). Spot month February contracts lost 1,973 positions (11,388) and April contracts fell 3,611 positions (161,296). DTN projected slaughter for Thursday is 115,000 head.

FEEDER CATTLE:

Open: Steady to 50 cents lower. Firm pressure is seen in feeder cattle trade with March contracts holding at $143 per cwt in the early minutes of trade. This move in March futures takes out the market rally seen over the last week, although other nearby contracts continue to hold prices within the previous market range boundaries. There will continue to be increased emphasis on the direction and activity levels in grain trade as well as traders focusing on the ability for live cattle markets to stabilize at the end of the week. Cash index for 2/12 is $141.79 up $0.13. Open interest Wednesday added 885 positions (49,685).

LEAN HOGS:

Open: 30 cents to $1 lower. Swift market losses have quickly developed in all but spot month February futures Thursday morning. The limited activity in February contracts makes these market moves essentially irrelevant at this point with most traders closely focusing on moves and price direction in April and June contracts. April futures are holding $1 per cwt losses which add to the softness seen midweek. At this point, prices are in line to test last week's lows. If prices dip below support levels and close at these levels, the support this week will be swept away, allowing for renewed concerns of long term pressure developing across the complex. Cash hog trade is steady to $0.50 lower. Bids are scattered through the range. Open interest gained 7,390 positions (242,960). February lost 513 positions (9,833) and April added 2,545 positions (98,417). Cash lean index for 2/12 is $55.55 down $0.36. DTN projected slaughter for Thursday is 477,000 head. Saturday runs are projected at 214,000 head.

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

(BAS)

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