DTN Before The Bell-Livestock

Hog Futures Continue Lower

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

Limited interest is seen through all cattle trade with overall lack of direction seen in the complex. Additional volume may step back into the complex through the end of the day, although markets may remain sluggish through the end of the month. Hog trade is under firm pressure as traders continue to back away from previous support on concerns of less aggressive exports. Corn markets are higher in light early trade. Stock markets are mixed. Dow Jones is 4 points lower with Nasdaq up 6 points.

LIVE CATTLE:

Open: Mixed. Narrow trading ranges have developed in sluggish activity through most of the Monday session. Following the sharp turn lower last week in all cattle markets, traders seem to be unwilling to aggressively move markets lower, but there is little to no incentive at this point for buyers to step back into the complex. Active liquidation over the past week has allowed for open interest to continue to tumble lower with noncommercial traders expected to be quickly backing away from the complex given the overall change in market direction. Limited volume is expected through most of the morning, likely keeping trade within a very narrow range. Cash cattle interest is not expected to remain sluggish over the next couple of days. Show list distribution and inventory taking will likely be the only interest shown in cash cattle markets through the day. Packers and feeders are likely to hold out until after the first of the month before bids or asking prices develop. Open interest Friday liquidated 7,888 positions (425,404). Spot month April contracts lost 805 positions (859) and June contracts slipped 7,048 positions (169,770). DTN projected slaughter for Monday is 118,000 head.

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FEEDER CATTLE:

Open: Mixed. Narrow trading ranges are seen early Monday morning as traders continue to focus on building market stability through the end of the month. Firming buyer support in grain trade is once again putting the emphasis on higher production costs as traders also try to adjust to strong market pressure last week. This market shift has created underlying uncertainty as prices have quickly tumbled from recent highs with no indication that traders are willing to step back into the complex anytime soon. It appears that feeder cattle futures may try to establish a firm market range from $150 to $155 per cwt in August contracts through early May. Cash index for 4/25 is $144.96 down $0.82. Open interest Friday fell 1,707 positions (51,623).

LEAN HOGS:

Open: $1 to $2 lower. Strong underlying pressure is developing through lean hog futures Monday morning as traders are picking up where they left off last week. Even though additional pork sales are expected to head to China over the next few months due to the issues with swine fever, traders are trying to find a more sustainable price range following the extremely emotional market swings over the last month. End-of-month positioning is also taking place, allowing for wide market swings to potentially develop over the next couple of days. Cash hog trade is called steady to $2 lower with most bids steady to $1 lower. Open interest added 4,660 positions (316,109). June fell 72 positions (80,572) and July gained 2,768 positions (43,743). Cash lean index for 4/25 is $83.40 up $0.61. DTN projected slaughter for Monday is 475,000 head.

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

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Rick Kment