DTN Before The Bell Livestock

GENERAL COMMENTS:

Livestock futures are mixed early Wednesday, following active pressure in corn and soybean markets. The aggressive pressure in corn values has the greatest impact on feeder cattle values, although the market is showing much less support in live cattle and lean hog futures trade. Corn is trading lower in light to moderate trade. Stock markets are higher in morning trade. Dow Jones is 72 points higher with NASDAQ up 167 points.

LIVE CATTLE:

Open: Mixed. Live cattle trade continues to be split between short and long term direction. The aggressive price pressure in grain trade has helped to support nearby live cattle trade, but building pressure is seen in deferred contracts. This is expected to continue to be seen through most of the session as traders continue to closely monitor outside market direction. Early estimates for Friday's cattle on feed report, focus on placement levels at 97% year ago levels. This appears to be the largest shift in report numbers, which could help to further support feeder cattle values. Cash cattle interest still remains sluggish, with bids still generally undeveloped midweek. Asking prices in the South are around $113 per cwt live basis, but not fully developed in the North. It is expected that limited interest may start to develop through the day Wednesday, but it is likely that active trade will be reserved for Thursday or Friday. Feeders are focusing extensively on limiting the recent market losses, but the concern remains that packers may try to make a point through the end of January, could limit upward market support. Open interest slipped 1,596 positions (319,755). February contracts lost 4,312 positions (56,927) and April contracts fell 114 positions (128,707). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Open: $1 to $2 higher. Active gains have redeveloped in all feeder cattle futures as traders are quickly adjusting to the sharp losses in corn prices Wednesday morning. The underlying weakness in corn prices is helping to secure additional support in spring and summer feeder cattle trade with March futures holding above $138 per cwt. The ability to spark renewed support in nearby and deferred contracts could move the focus away from production costs and back to short and long term supplies. Cash index for 1/18 is $133.43, down 1.55. Open interest Tuesday fell 666 positions (40,589).

LEAN HOGS:

Open: Mixed. Narrow price shifts are holding in lean hog futures as traders retract from sharp triple-digit losses Tuesday. The focus on sharp lower adjustments in grain prices seems to be creating further uncertainty in the direction of hog trade, although narrow gains are developing as short covering is seen in spot month contracts. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents lower. Open interest fell 2,368 positions (207,242). February liquidated 4,150 positions (32,631) and April added 1,181 positions (83,702). Open interest in pork cutout futures fell 73 positions (1,041). Cash lean index for 1/18 is 65.92, up 0.36. DTN projected slaughter for Wednesday is 499,000 head. Saturday runs are projected at 320,000 head.

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

(c) Copyright 2021 DTN, LLC. All rights reserved.