DTN Before The Bell-Livestock

GENERAL COMMENTS

Sharp losses have quickly developed in lean hog trade as traders continue to struggle to cope with wide ranging market swings and the emotional trade activity seen over the last couple of weeks. Thursday's gains are quickly eroding at the end of the week. Cattle futures are mixed to mostly lower, as limited volume is keeping buyers on the sidelines, but prices stuck in a narrow trading range. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 271 points higher with Nasdaq up 34 points.

LIVE CATTLE:

Open: Steady to 30 cents lower. Narrow losses have trickled into Friday's futures trade as most nearby contracts are consistently holding losses of 20 to 25 cents per cwt. The overall lack of support in the complex Friday morning continues to add uncertainty to the live cattle market and overall cattle complex. With beef values unable to move in a uniform direction through the week and cash markets stable with previous week's levels, the futures complex remains stuck in a sideways pattern with generally strong market boundaries well established through the spring. This could create a challenge through the next couple of months, as traders seem to be unwilling or unable to move past these levels. Without significant long-term direction, overall volume and open interest is expected to slowly erode through the spring and summer months. Cash cattle trade is expected to develop in the North at some point through the day, although southern trade may be wrapped up for the week. Bids are seen Friday morning at $126 live and $203 to $204 dressed. This is still below asking prices of $126 to $127 live and $207 dressed. Feeders seem to be focused on steady to firm market trends by the end of the week. Open interest Thursday added 3,477 positions (446,598). Spot month April contracts lost 2,178 positions (20,004) and June contracts added 8 positions (196,283). DTN projected slaughter for Friday is 114,000 head.

FEEDER CATTLE:

Open: Mixed. Narrow trading ranges are seen once again Friday morning in feeder cattle trade. The underlying pressure through opening minutes of trade is focusing on adjusting positions following Thursday's market gains. The overall lack of direction in cattle trade continues to be a challenge in both live cattle and feeder cattle markets with traders focus on expected strong seasonal demands to keep the market firm. But current and expected strong supplies of cattle ready for market through the summer and fall is limiting upside market potential through the month of April. Cash index for 4/10 is $143.35 down $0.28. Open interest Thursday added 1,153 positions (52,127).

LEAN HOGS:

Open: 50 cents to $1.50 Lower. Traders are quickly backing away from earlier gains despite the recent support from reported sales to China. Even though traders continue to feel that market support has developed, most of this recent rally over the last month and a half has been solely driven by expected china trade and the expectation that continued buying activity will develop. Due to African swine fever, production in China has been disrupted, causing price gains. It is uncertain just how much buying will develop through the rest of the year, but markets seem to have already factored in aggressive exports to China at current price levels. This could leave the market underwhelmed over the coming days and weeks if aggressive follow-through buying is not seen. Cash hog trade is called steady to $1 lower. Bids are scattered through the range. Open interest added 3,629 positions (294,737). April added 785 positions (12,032) and June fell 310 positions (81,114). Cash lean index for 4/10 is $79.36 up $0.07. DTN projected slaughter for Friday is 445,000 head. Saturday runs are expected at 93,000 head.

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

(BAS)

Copyright 2019 DTN/The Progressive Farmer. All rights reserved.