DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong early gains have moved through lean hog trade Monday morning as traders adjust to the recent support seen through the complex. This continues to distance price levels from market lows, bringing additional market volume and open interest back into the complex. Cattle markets are mixed in limited activity as nearby live cattle futures show fatigue after unable to break through long-term resistance levels. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 44 points higher with Nasdaq up 36 points.

LIVE CATTLE:

Open: Mixed. Narrowly mixed trading ranges are seen through live cattle futures. The initial lack of follow through support in nearby trade has the potential to spark additional widespread pressure as April contracts have quickly eroded 55 cents per cwt through the first few minutes of trade. This has pushed prices in April contracts to $129 per cwt, as traders seem to have lost grasp of the ability to break through resistance levels set in early 2018 at $130.10. If prices continue to shift lower over the near future, further liquidation is likely as traders focus on recent gains as the potential market high. Cash cattle interest remains dead in the water with inventory taking and show list distribution following moderate trade at higher prices late last week. It is expected that bids and asking prices will hold out until midweek, and active trade may be delayed until the end of the week once again. Open interest Friday added 6,763 positions (420,207). Spot month April contracts lost 2,155 positions (153,761) and June contracts added 2,984 positions (136,662). DTN projected slaughter for Monday is 116,000 head.

FEEDER CATTLE:

Open: Steady to 80 cents higher. Firm support is moving into deferred futures trade as traders focus on cold weather concerns and how this will impact overall feeder cattle numbers through the end of the year as this brutal and long lasting cold snap is seen during calving season in many areas of the country. Nearby contracts are steady to slightly higher as traders focus on limited direction in live cattle futures, while concerned about long term supply issues. Cash index for 2/28 is $139.23 down $0.71. Open interest Friday gained 1,593 positions (53,909).

LEAN HOGS:

Open: Steady to $1.50 higher. April contracts are quickly leading the lean hog complex as traders put distance between current market prices and recent long term support levels. The steady gains over the last week has sparked additional trader interest into the complex, allowing many of the traders hovering on the sidelines waiting for longer-term market direction to step back into the complex. The focus on potential trade deals with China becoming closer to a reality is helping to add support to all contracts during early week trade. Cash hog trade is steady to $1.00 lower. Most bids are steady to 50 cents lower. Open interest gained 2,166 positions (259,726). April fell 2,300 positions (102,437) and June added 2,085 positions (48,975). Cash lean index for 2/28 is $52.13 down $0.51. DTN projected slaughter for Monday is 467,000 head.

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

(BAS)

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