DTN Before The Bell-Livestock

Hog Trades Cover Short Positions Friday Morning

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Moderate trade is seen early Friday with short covering quickly developing in hog prices. This is helping to stop the strong weakness in the market, but at this point traders are looking more for market stability than any sign of sharply higher trade. Cattle markets are mixed to mostly lower as demand uncertainty is limiting interest. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 274 points higher with Nasdaq up 28 points.

LIVE CATTLE:

Open: Mixed. Limited activity is seen in live cattle trade with most contracts holding narrow losses. Although traders focus on the potential of higher cash market trade, the concern of moving additional beef at steady to higher prices is becoming more uncertain. This could spark some additional underlying pressure in the market, and limit follow through support during the Friday session. Cash cattle remain sluggish going into Friday morning with a few bids redeveloping in the same range as previous days. Live bids are at $122, while dressed bids are at $198. Asking prices are holding at $126 and higher live and $203 to $205 dressed. It may be late afternoon before trade develops. Open interest Thursday gained 3,215 positions (390,891). Spot month February contracts lost 1,755 positions (9,634) and April contracts fell 1,051 positions (161,296). DTN projected slaughter for Friday is 116,000 head.

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FEEDER CATTLE:

Open: Steady to 50 cents lower. Initial pressure is moving back into feeder cattle trade as traders are concerned of late day pressure developing in live cattle trade as well as limited support moving back into the grain complex. This could spark underlying end of the week pressure in all feeder cattle trade, limiting the expectations of additional market gains. Cash index for 2/12 is $141.79 up $0.13. Open interest Thursday added 731 positions (50,403).

LEAN HOGS:

Open: 30 cents to $1 higher. Late-week buying has slowly moved into the complex. At this point the light trade activity in nearby contracts is listed more as short covering than any significant market moves. There is increased underlying support through the entire market as traders will try to redevelop a sense of stability as prices hover at or near long term support levels. The continued weakness in fundamentals is being offset by hope and expectations that a meaningful trade agreement will develop with China as talks are scheduled to continue next week. Cash hog trade is steady to $0.50 lower. Most bids are steady. Open interest gained 2,653 positions (245,624). February lost 88 positions (9,741) and April added 1,160 positions (99,577). Cash lean index for 2/13 is $55.21 down $0.35. DTN projected slaughter for Friday is 477,000 head. Saturday runs are projected at 214,000 head.

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

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Rick Kment