DTN Before The Bell-Livestock

GENERAL COMMENTS

Narrow prices shifts are developing in lightly traded cattle futures early Wednesday. With prices nearing $130 per cwt, in April futures, the focus on moving past this level is more of a physiological barrier than anything else. But a shift higher through the morning would likely redevelop market support over the near future. Lean hog futures have pulled away from recent gains, as traders continue to struggle in order to find consistent support due to underlying fundamental pressure and concerns of pork demand growth. Corn markets are higher in light early trade. Stock markets are lower. Dow Jones is 47 points lower with Nasdaq down 15 points.

LIVE CATTLE:

Open: Steady to 20 cents lower. Narrow losses slowly developed in the opening minutes of trade as the limited volume has allowed for traders to focus on narrow price adjustments following the steady march higher in prices. This may add even more underlying support to the complex if pressure is limited to these narrow losses, which in many cases has been confined to single-digit moves. A move through $130 per cwt in April contracts would likely spark additional trade support allowing firm buyer activity to hold current positions through the end of the month. Cash cattle activity remains at a standstill with a few asking prices still on the table at $130 and higher live and $206 and higher dressed. These asking prices are not expected to erode any time soon, given the firmness of the complex. Bids may not be seen until later today, or potentially sometime Thursday, although trade may be pushed off until Friday once again. Open interest Tuesday added 4,101 positions (403,439). Spot month February contracts lost 683 positions (1,317) and April contracts fell 1,029 positions (155,244). DTN projected slaughter for Wednesday is 116,000 head.

FEEDER CATTLE:

Open: Mixed. Lackluster market direction is seen early Wednesday with prices hovering from 20 cents lower to 25 cents higher. The early pressure in live cattle trade has created some early morning positioning in all cattle markets, although there still seems to be some additional buyer interest hovering in the wings, waiting for initial sell orders to clear in order to step back into the complex. Cash index for 2/25 is $140.33 down $0.09. Open interest Tuesday gained 192 positions (51,077).

LEAN HOGS:

Open: Steady to $1 lower. Losses have quickly developed across lean hog trade early Wednesday morning with nearby contracts holding losses of 80 cents to $1 per cwt following a pullback on previous gains. The market structure remains extremely unsettled even though prices had pushed off of support levels, the recent market shifts continue to keep trade in a bearish pattern given the lack of demand support and available hogs still in the pipeline. Strong cash market losses Tuesday has added to the overall futures market weakness as traders took note of the active sales $1 lower in the Tuesday afternoon report. Cash hog trade is steady to $1.00 lower. Bids are scattered through the range. Open interest gained 444 positions (249,392). April added 1,694 positions (103,632) and June added 624 positions (45,479). Cash lean index for 2/25 is $52.85 down $0.28. DTN projected slaughter for Wednesday is 477,000 head. Saturday runs are expected to reach 195,000 head.

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

(BAS)

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