DTN Before The Bell Livestock

GENERAL COMMENTS:

The weekly export-sales report was generally disappointing for the beef and pork markets, but live cattle and lean hog futures traders have largely shrugged it off in favor of a mixed open. Corn futures are trading up 8 1/2 cents. Stock markets are higher Thursday morning, with the Dow Jones up 13.2 points and the NASDAQ up 40.86 points.

LIVE CATTLE:

Open: Mixed. The nearby February contract is down $0.30 at $115.825 and the April contract is up $0.325 at $123.025. A disappointing export-sales report Thursday morning may be driving some of the sales activity in the nearby contract. Cash cattle trade is still aiming for late in the week, but some cattle sold in Kansas Wednesday at $114 (fully steady with last week) and some in Nebraska at $180 ($1 higher than last week). Both movements were so light it's hard to say the market has established a trend. The fluttering prices in the futures markets aren't likely to provide one, either. DTN projected slaughter for Thursday is 116,000 head. On Wednesday, total open interest lost 515 positions (327,483). The February contract lost 2,101 positions (12,289) and the April contract lost 4 positions (147,247).

Beef export sales between Jan. 29 and Feb. 4 showed a disappointing weekly number after several small batches of decreases: 17,500 metric tons overall, mostly headed to Japan, South Korea and Mexico.

FEEDER CATTLE:

Open: Mixed. All of the feeder cattle futures trading sessions so far this week have featured hefty trading volumes, and this pace of activity seems to be continuing Thursday morning although prices aren't shifting very far in either direction. The nearby March contract is up $0.55 at $140.05 and the April contract is up $0.35 at $143.85. Without fresh direction, the continuous chart could find itself stuck in a channel between $137 and $141. The CME Feeder Cattle Index for Feb. 9 was up $0.02 to $135.65. On Wednesday, total open interest added 788 positions (41,585). The March contract lost 707 positions (14,495) and the April contract added 930 positions (10,533).

LEAN HOGS:

Open: Higher. Streaky higher movement in lean hog futures lately hasn't scared off buyers yet, and most 2021 contracts opened 25 to 55 cents higher Thursday morning. The nearby February contract is up $0.45 at $74 and the April contract is up $0.525 at $82.35. Live hog futures trading volume at the Dalian Commodity Exchange in China has dwindled this week ahead of the Lunar New Year holiday that begins tonight, and the exchange will be closed through Feb. 17, removing one source of bullish encouragement to Chicago lean hog futures. The recent drop in the U.S. Dollar Index seems to be stabilizing Thursday morning. On Wednesday, total open interest grew by 5,412 positions (245,181). The February contract liquidated 349 positions (8,663) and the April contract added 953 positions (101,586). Open interest in pork cutout futures added 60 positions (1,764). The CME Lean Hog Index for Feb. 9 popped higher again by $0.67 to $71.74. Cash hog bids are expected steady to $1 per cwt higher. Thursday slaughter numbers are projected near 495,000 head. Friday's slaughter will presumably be similarly large, and the Saturday run is expected at 216,000 head.

The weekly export sales report showed net pork sales for 2021 at 36,900 metric tons, mostly headed to China (9,700 mt), South Korea (8,200 mt), Mexico (5,100 mt), Japan (4,700 mt), and Canada (2,700 mt). China was once again the leading destination of physical export shipments (10,700 mt) in the penultimate week before their Lunar New Year festivals begin.

Elaine Kub is the author of "Mastering the Grain Markets: How Profits Are Really Made" and can be reached at masteringthegrainmarkets@gmail.com or on Twitter @elainekub.

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