DTN Before The Bell-Livestock

GENERAL COMMENTS

Cattle futures have been able to regain light to moderate buyer support early Wednesday morning based on follow through support. The expectation that additional cash market interest will be shown through the day Wednesday should help to spark interest through the complex. Corn futures are trading lower in light early trade. Stock markets are higher in light trade. Dow Jones is 70 points higher, while Nasdaq is up 5 points.

LIVE CATTLE:

Opening call: Steady to 70 cents higher. Firm buyer support continues to develop through live cattle futures trade. Although the market was unable to hold the momentum seen in early trade Tuesday, the ability to keep prices in positive territory at the end of the session is creating some additional market support. Trade volume is expected to remain sluggish as there will continue to be more focus on cash market activity and outside market developments over the next couple of days. But holding prices near the top side of the trading range and near the December highs of February contracts may continue to spark some additional buyer interest through the morning. Cash cattle markets are expected to remain inactive through most of the morning as most of the area is cleaning up from winter storms. Expect packer interest to start to develop through the day Wednesday, although active trade is not likely to be seen until sometime Thursday or Friday. Open interest Tuesday slipped 1,019 positions (276,555). Spot February fell 1,901 positions (30,933) and April contracts gained 1,247 positions (117,082). DTN projected slaughter for Wednesday is unavailable at this time but will be will be reduced due to weather conditions.

FEEDER CATTLE:

Opening call: 50 cents to $1 higher. Feeder cattle futures are trading moderately higher once again as early buyers stepping into the market are taking the same approach as they did Tuesday morning. It is uncertain if this momentum will stick, but the underlying support in the live cattle complex is expected to help draw at least some buyer support back to the complex through most of the morning. Open interest Tuesday gained 277 positions (37,387). Cash index for 2/1 is 160.28 down 0.30.

LEAN HOGS:

Opening call: Mixed. Early price direction is mixed as prices started to shift lower with initial trade following the pattern from Tuesday, although light buyer support is trying to redevelop midweek. It is uncertain just how much support can redevelop through the complex as traders are looking for additional longer term buyer support and further cash market support. Nearby futures are holding gains of 5 to 20 cents per cwt in the first few minutes of trade, while deferred futures are holding narrow losses. Outside markets may continue to play a significant factor in the ability to draw buyers back into the complex. Cash bids are expected to be steady. Open interest Tuesday added 1,916 positions (183,438) Spot month February fell 1,278 positions (23,125) and April added 525 positions (75,518). Cash lean index for 2.1 is 62.51, up 0.84. DTN projected slaughter for Wednesday is will be significantly reduced due to weather.

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

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