DTN Before The Bell-Livestock

Mixed Trade Limits Traders Interest

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

Livestock futures are narrowly mixed Tuesday morning with very limited activity developing. Live cattle futures are leading the market higher with 30 to 40 cent gains in nearby contracts. It is unlikely that the extremely narrow trading ranges will continue through the session as volume increases, but it appears traders are focusing on market stability in all markets. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 110 points higher with Nasdaq up 29 points.

LIVE CATTLE:

Open: Mixed. Light nearby gains are being offset by light to moderate pressure in early 2020 contract months. Limited trade activity is expected most of the day Tuesday. Even though overall market movements remain narrow compared to typical daily activity, the 30 to 40 cent gains in nearby contracts is still hands down the widest market shift seen through the entire livestock complex Tuesday morning. This could spark some additional underlying support through the complex as traders look for increased follow-through commercial interest moving into the well supported live cattle complex Tuesday. Cash cattle interest is still expected to remain sluggish Tuesday, although a few asking prices may start to develop through the end of the day. At this point, active bids are not likely to readily develop, although many are waiting to see if some trade activity develops Wednesday once again. This could spark some additional underlying support through the entire complex, ahead of the long weekend. Open interest Monday slipped 2,266 positions (443,884). Spot month April contracts lost 3,224 positions (13,495) and June contracts fell 955 positions (195,778). DTN projected slaughter for Tuesday is 120,000 head.

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FEEDER CATTLE:

Open: Mixed. Inactivity is seen through futures trade Tuesday morning with prices hovering from 5 cents lower to 7 cents higher during morning trade. This narrow trading range of 13 cents per cwt is unusual for even the feeder cattle market which many times remains lightly traded and generally inactive. But the overall lack of additional market news or overall price direction combined with sluggish trade during the Easter week has sparked increased market stability. It is likely that additional price shifts may slowly develop as volume increases through the session, but at this point, it appears markets will hover in a narrow range. Cash index for 4/12 is $142.99 up $0.21. Open interest Monday added 47 positions (53,254)

LEAN HOGS:

Open: Mixed. Narrow trading ranges have developed in opening minutes of trade Tuesday with limited follow-through support trickling into nearby contracts as prices are steady to 20 cents per cwt higher. Limited trade volume is expected through the entire week, with traders looking for additional direction from export sales reports, which will be released on Thursday. The continued underlying support is focused on the principle that China will continue to be large buyer of pork through the entire year. The concern from past sales activity of pork and other ag products is that China buying is not always the most consistent, and this could continue to spark wide-ranging market shifts depending on short-term movements of pork exports. Cash hog trade is called 50 cents lower to $1 higher. Most bids are steady. Open interest added 5,548 positions (301,994). June added 392 positions (82,356) and July added 383 positions (34,393). Cash lean index for 4/12 is $79.57 up $0.23. DTN projected slaughter for Tuesday is 474,000 head. Saturday runs are expected at 89,000 head.

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

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Rick Kment