DTN Before The Bell-Livestock

Hog Futures Rally Higher

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Cattle futures are mixed in light to moderate trade, as a pullback in nearby feeder cattle trade has sparked some additional uncertainty through the entire complex. This has pulled contracts from recent gains, but the tone of the market remains firm. Renewed buying is quickly moving into hog trade shaking off earlier pressure. Corn markets are lower in light early trade. Stock markets are lower. Dow Jones is 110 points lower with Nasdaq down 10 points.

LIVE CATTLE:

Open: Mixed. Narrow trading ranges are holding through live cattle trade with steady to 20-cent losses seen in nearby trade, while slim market gains are developing in late summer and fall contract months. The overall pressure in the complex continues to focus on overall lack of direction despite recent gains in beef values helping to bring some underlying support to the entire complex. This may add some additional support to the market, allowing for increased trade volume through the Wednesday session. Little new market direction is expected to be seen through the week as flooding through the Midwest has continued to hamper production levels and transportation of animals, but little concrete numbers concerning overall cattle losses have yet to developed. Cash cattle interest remains sluggish with bids still undeveloped in all areas. Earlier asking prices have priced cattle at $130 to $132 live and $210 dressed, but little direction is expected to be seen until later in the week. Packer interest may start to slowly improve through the next couple of days, but there is limited trade likely until late in the week. Open interest Tuesday added 4,464 positions (444,471). Spot month April contracts lost 3,256 positions (70,269) and June contracts added 4,128 positions (195,907). DTN projected slaughter for Wednesday is 118,000 head.

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FEEDER CATTLE:

Open: Mixed. Light pressure is moving into nearby feeder cattle futures following underlying fundamental support seen early in the week. March and April contracts are holding limited losses of 25 to 55 cents per cwt, with the potential for increased market softness developing as traders back away from long-term highs seen Tuesday. Very little long-term direction is seen through the morning with increased movement likely to continue to shift in and out of the complex. Early estimates for March cattle on feed report are pegged at 96% of 2018 levels, which is expected to help support deferred contract prices based on tighter supplies moving into feedlots through the spring. Cash index for 3/18 is $137.67 up $0.17. Open interest Tuesday fell 660 positions (51,528).

LEAN HOGS:

Open: Steady to $1 higher. Moderate to strong buyer interest is slowly but steadily moving back into the complex. This is helping to spark some additional buyer activity through summer contracts following losses which developed Tuesday. The underlying support in the market continues to point toward expected firm gains in pork demand and follow through cash market support. The moderate market correction seen Tuesday has given traders the confidence to step back into the complex with increased momentum. Cash hog trade is steady to $2 higher. Most bids are $1 higher. Open interest fell 608 positions (273,608). April fell 1,681 positions (34,848) and June slipped 242 positions (82,856). Cash lean index for 3/18 is $57.54 up $1.00. DTN projected slaughter for Wednesday is 477,000 head. Saturday runs are expected near 165,000 head.

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

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Rick Kment