DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed trade is slowly developing in livestock trade with light to moderate losses in cattle trade offset by moderate buying activity moving into hog markets. The overall lack of support in cattle prices may allow for moderate to firm erosion over the next few days. Corn markets are higher in light early trade. Stock markets are lower. Dow Jones is 68 points lower with Nasdaq down 20 points.

LIVE CATTLE:

Open: 20 to 60 cents lower. Firm pressure has continued to develop early Tuesday morning as traders focus on backing away from recent market gains. With the inability for April contracts to move above $130 per cwt, prices have reverted into a sideways short term range, and could continue to hover within this $3 per cwt trading range over the near future. Continued fundamental support exists, which could help to limit losses over the near future, but this may add increased volatility to cattle markets through the upcoming weeks. Cash cattle markets are still quiet, which is expected for a Tuesday morning as bids and asking prices are undeveloped. It is likely that active trade will be pushed toward the end of the week as both sides closely focus on futures activity and outside market direction. Open interest Monday added 3,723 positions (423,379). Spot month April contracts lost 4,752 positions (148,846) and June contracts added 4,296 positions (140,672). DTN projected slaughter for Tuesday is 118,000 head.

FEEDER CATTLE:

Open: Steady to 50 cents lower. Light pressure is moving into feeder cattle trade as traders quickly pull back from early-week gains following continued pressure in the live cattle complex. This may spark additional underlying pressure in feeder cattle trade through the week with more emphasis on continued support in grain trade and concerns further widespread erosion may develop through the rest of the live cattle complex. Cash index for 2/28 is $139.23 down $0.71. Open interest Monday gained 1,338 positions (55,203).

LEAN HOGS:

Open: Steady to $0.40 higher. Limited gains are slowly trickling back into nearby lean hog trade with prices hovering 10 to 40 cents per cwt higher in the opening minutes of activity. Lack of interest in deferred contracts is leaving prices untraded from Monday's market moves at this point although the overall sluggish activity could add some limited price pressure later in the morning. Traders continue to step back into April futures, but the overall lack of support in summer and fall contracts is adding concern due to overall supply issues that may limit further aggressive support. Cash hog trade is 50 cents lower to $1.00 higher. Most bids are steady to 50 cents higher. Open interest gained 1,528 positions (261,102). April fell 2,771 positions (99,661) and June added 2,313 positions (51,279). Cash lean index for 3/01 is $51.93 down $0.20. DTN projected slaughter for Tuesday is 477,000 head. Saturday runs are expected at 186,000 head.

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

(BAS)

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