DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong follow-through pressure is redeveloping in lean hog trade. The underlying softness in the complex continues to add triple-digit losses to all nearby trade. Cattle buying is slowly developing in futures trade, focusing on renewed beef value support. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 54 points higher with Nasdaq up 45 points.

LIVE CATTLE:

Open: Mixed. Initial trade remains extremely limited with prices steady to 20 cents higher in most contracts. The focus on firming fundamental support has offset early-week pressure and may help to push prices slowly but steadily higher through the week. Cash cattle interest remains quiet with bids and asking prices undeveloped at this point. It is likely that very little activity will be seen through the day with more movement and potential trade seen midweek or later. Open interest Monday gained 47 positions (449,898). Spot-month April contracts lost 1,186 positions (6,767) and June contracts slipped 1,802 positions (191,982). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: Steady to 50 cents higher. Limited buyer support is trickling back into the complex. This is adding additional underlying interest to move back into the complex, even though trade volume remains sluggish. The overall softness in the complex continues to add increased overall uncertainty, but the potential to regain early-week losses is helping to rekindle wide-ranging support through the entire complex. Cash index for 4/19 is $144.97 down $0.01. Open interest Monday fell 621 positions (55,543).

LEAN HOGS:

Open: $1 to $2 lower. Sharp follow-through pressure is quickly moving through most lean hog trade. The shift lower Monday seemed to serve as a realization that recent market support may have been overstated and the emotional upswing seen over the last few weeks could be facing the reality that additional strong domestic production may create some underlying volatility through the complex. Traders still feel confident that additional sales to China and a potential trade deal will support the market. But the biggest question traders are wrestling with at this point is, what price levels can be sustained long term. This is likely to add some additional market shifts to lean hog trade over the next several weeks. Cash hog trade is called steady to $1 higher. Most bids are steady to firm. Open interest added 4,576 positions (306,651). June added 1,869 positions (82,013) and July added 1,351 positions (38,361). Cash lean index for 4/18 is $81.02 up $0.45. DTN projected slaughter for Tuesday is 479,000 head. Saturday runs are expected at 189,000 head.

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

(BAS)

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