DTN Before The Bell-Livestock

GENERAL COMMENTS

Sharp gains quickly developed in lean hog trade with nearby contracts seen in all remaining 2019 contract months. The push higher has posted $2.40 per cwt gains in April contracts with the focus on potential demand support if China exports expand through the next year. Cattle markets are mixed in a narrow range as light volume keeping prices contained during early trade. Corn markets are higher in light early trade. Stock markets are lower. Dow Jones is 91 points lower with Nasdaq down 47 points.

LIVE CATTLE:

Open: Mixed. Initial moves in live cattle futures are mixed with most of the focus on livestock trade now shifting back to the hog complex. This momentum shift may not create significant pressure through live cattle trade, but the potential for light to moderate losses developing through the morning could add some additional pressure through the end of the week. Cash cattle interest is slowly improving with bids seen at $123 live and $198 dressed. This is still worlds away from asking prices of $128 and higher live and $205 to $207 dressed. Trade may not become active until Friday. Open interest Wednesday added 3,469 positions (395,300). Spot month February contracts lost 1,297 positions (5,533) and April contracts added 911 positions (160,610). DTN projected slaughter for Thursday is 115,000 head.

FEEDER CATTLE:

Open: Mixed. Limited activity is seen through the entire cattle complex early Thursday morning with narrow single digit losses developing in nearby trade, while limited gains are filtering through the market. The lack of direction of the last two trading sessions is causing some additional concern, but there is very little evidence that active pressure is redeveloping in any cattle markets over the near future given expected beef demand support. Cash index for 2/19 is $141.10 down $0.18. Open interest Wednesday added 456 positions (50,798).

LEAN HOGS:

Open: $1 to $2 higher. Active support has quickly moved back into lean hog trade early Thursday morning as traders focus on the potential that increased China trade will help to redevelop pork demand within the country. Reports that China will agree to buy $30 billion more agricultural products has quickly aligned buyers in the already bearish and oversold hog complex. Even though trade expectations assume this will include pork and pork products, there has been no mention of pork specifically, with most of the focus on soybeans and corn. This could bring additional volatility through the next several weeks as more information about what products and how much of each may be involved in the deals. Cash hog trade is steady to $1.00 lower. Bids are scattered through the range. Open interest fell 151 positions (241,788). April added 2,784 positions (103,689) and June added 1,078 positions (44,225). Cash lean index for 2/19 is $54.13 down $0.30. DTN projected slaughter for Thursday is 477,000 head. Saturday runs are projected at 151,000 head.

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

(BAS)

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