DTN Before The Bell-Livestock

Light to Moderate Gains Step into Cattle Trade Early Friday

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

Light to moderate buyer support is slowly developing early Friday morning as traders have focused on late week short covering following the aggressive market pressure which developed Thursday. The wide price swings seen all week have created very little market consistency and are limiting any sense of market direction through the cattle complex during the middle of February. Corn futures are trading lower in light early trade. Stock markets are higher in light trade. Dow Jones is 110 points higher, while Nasdaq is up 12 points.

LIVE CATTLE:

Opening call: Steady to 50 cents higher. Light gains are seen early Friday morning, which is the giving some light support to the complex, but at the same time helping to bring some buyer interest back from the sharp liquidation seen Thursday. These wild up-and-down swings seen through the week have created additional uncertainty through the market, which continues to lead very little consistency to the overall market direction of the complex. Cash cattle markets are quiet Friday morning following moderate to active trade Thursday in both the North and South areas. It is expected that most activity for the week has been done over the last couple of days. There could be some cleanup trade done in the North, prices are expected to be set. Prices are generally $3 lower in the South and $4 lower in the North than last week. Open interest Thursday added 1,307 positions (272,885). Spot February fell 1,627 positions (9.327) and April contracts added 1,327 positions (124,081). DTN projected slaughter for Friday is 105,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1 higher. The wide price shifts seen through cattle markets continue through the end of the week with strong triple digit gains once again developing early Friday morning. This is pushing $1.40 per cwt gains in March futures, as traders focus on the ability to draw buyers back into the market following sharp pressure, and an attempt to bring some sense of stability at the end of the week. It is uncertain just how much additional market momentum will be seen through the day, and if buyers will find a sense of consistency now that cash trade seems to have wrapped up for the week. Open interest Wednesday added 229 positions (39,173). Cash index for 2/10 is 158.79 down 0.30.

LEAN HOGS:

Opening call: Mixed. Firm early buyer support is redeveloping in nearby lean hog futures trade based on strong gains which quickly developed Thursday. The focus is based primarily on front-month support contract support, while uncertainty seen in the rest of the complex. Trade volume is expected to remain sluggish through the rest of the morning as mixed trade is holding through within a narrow range. Cash bids are steady to 50 cents higher with most bids steady. Open interest Thursday added 4,971 positions (197,038) Spot month February fell 543 positions (15,366) and April added 2,574 positions (81,040). Cash lean index for 2/10 is 65.60, up 0.39. DTN projected slaughter for Friday is 430,000 head, with Saturday slaughter expected to be at 200,000 head.

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

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Rick Kment