DTN Before The Bell-Livestock

GENERAL COMMENTS

Active buyer interest is seen in all livestock trade with Lean hog futures setting the tone with gains of $1 to $2 per cwt Thursday morning. Buyers are stepping back into a slightly oversold cattle complex although limited volume may stifle upward movement. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 121 points higher with Nasdaq up 18 points.

LIVE CATTLE:

Open: 30 to 70 cents higher. Limited but firm gains are steadily moving back into the live cattle trade. This is allowing for increased overall support through the entire complex. April futures have moved above $126 per cwt once again, and June futures are holding support levels above $119 per cwt. Trade volume is likely to remain sluggish through most of the morning, but if feeder cattle markets can maintain early support, further interest is expected to develop during the rest of the day. Cash cattle trade started to develop Wednesday, with light trade seen in the South at $124 per cwt. This is generally $1 per cwt lower than last week. Although additional trade is expected to need to take place, the amount of cattle sold could have set the overall tone of the market unless a major shakeup is seen in futures or wholesale beef values. Bids are expected to slowly redevelop through the morning, although the tone of the complex remains sluggish. Asking prices are still seen at $127 and higher live and $207 to $208 dressed. Open interest Wednesday added 2,084 positions (442,226). Spot month April contracts lost 2,038 positions (36,357) and June contracts added 368 positions (200,733). DTN projected slaughter for Thursday is 118,000 head.

FEEDER CATTLE:

Open: Steady to $1.50 higher. Active support has quickly moved back into feeder cattle trade. The underlying support in the complex followed an aggressive market push lower during early April based on overall beef demand uncertainty and reducing premiums through the complex. It is uncertain just how deep renewed buying is through the complex, but the ability to maintain initial support is expected to stimulate additional commercial buying through the end of the week. Cash index for 4/1 is $142.44 down $0.06. Open interest Wednesday lost 882 positions (49,644).

LEAN HOGS:

Open: $1 to $2 higher. Active buyer interest is still driving lean hog trade higher with nearby contracts holding gains of $1.50 to $2 per cwt through the first few minutes of trade. April futures are showing limited support with most of the trade activity moving into the June and July contracts. Traders are still focusing on the potential developments coming out of the U.S. and China trade negotiations taking place this week. The expectation and hope that something more concrete develops through the entire complex is helping to bring buyers to the table. These recent gains are retesting contract highs, with potential follow through support seen later in the morning. No additional sales or shipments to China were reported in the last weekly export sales report. But so far, the market seems to have overlooked the lack of buying activity. This could quickly change the tone of the market if confirmation of China needing to buy pork does not develop. Cash hog trade is called $1 lower to $1 higher. Most bids are expected steady Thursday morning. Open interest added 3,312 positions (282,659). April fell 1,576 positions (19,402) and June slipped 287 positions (81,478). Cash lean index for 4/1 is $77.70 up $0.92. DTN projected slaughter for Thursday is 477,000 head. Saturday runs are expected at 145,000 head.

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

(BAS)

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