DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate price shifts have developed Thursday morning as traders prepare to exit the month of February. Lean hog trade is holding moderate gains as follow through buyer support is stepping into the complex, distancing itself from support levels. Pressure in feeder cattle is adding weakness to live cattle trade early Thursday. Corn markets are lower in light early trade. Stock markets are mixed. Dow Jones is 18 points higher with Nasdaq down 25 points.

LIVE CATTLE:

Open: Mixed. Light pressure is seen in most lean hog futures with single-digit gains holding in the tiring February contracts, while other nearby trade is holding 15 to 20 cent losses. The inability to break through long-term resistance levels of $130.10 per cwt will continue to be the focus through the morning. But with trade volume extremely light, it would not take much to break out of this narrow pattern in either direction. There still remains firm fundamental support through the cattle complex, but continued failed attempts to move higher will likely lead to a market retraction. Cash cattle interest is sluggish, although bids have redeveloped within the same range as seen Wednesday. Bids are holding at $124 to $125 live and $202 dressed. Asking prices are unchanged with $130 and higher live and $205 to $206 dressed. Trade may easily be delayed until late in the week. Open interest Wednesday added 4,236 positions (407,312). Spot month February contracts lost 683 positions (1,317) and April contracts fell 1,029 positions (155,244). DTN projected slaughter for Thursday is 117,000 head.

FEEDER CATTLE:

Open: 10 to $1 lower. Firm pressure has quickly moved into feeder cattle trade Thursday morning despite additional pressure in corn trade. This has offset midweek support as traders have started to regroup and establish trading ranges through the end of the month, rather than focusing on potential gains. Being the end of the month, there is likely to be some market shifts as trader's position holdings before month end. This could add to the early morning pressure, but so far, little fundamental market change has yet to develop. Cash index for 2/26 is $140.46 up $0.13. Open interest Wednesday gained 266 positions (51,332).

LEAN HOGS:

Open: Steady to $1 higher. Light but steady buying is slowly developing in lean hog trade with April and May contracts posting 50 to 70 cent gains in the early minutes of activity. The consistency of "slow but steady" buyer interest moving back into the complex is helping to establish a rebuilding market tone as traders are focusing on long-term demand potential. Cash hog trade is steady to $1.00 lower. Most bids are steady to 50 cents lower. Open interest gained 3,980 positions (253,099). April added 571 positions (104,204) and June added 339 positions (45,803). Cash lean index for 2/26 is $52.82 down $0.03. DTN projected slaughter for Wednesday is 477,000 head. Saturday runs are expected at 195,000 head.

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

(BAS)

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