DTN Before The Bell-Livestock

Moderate Pressure Develops Across Cattle Trade

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

Cattle futures are under pressure early Friday morning. The light volume in late-week trade is focusing on potential end-of-week positioning as well as some outside market pressure. But traders remain cautious about the overall ability to continue to draw more commercial buyer interest into the market into the complex over the near future. Corn futures are trading lower in light early trade. Stock markets are lower in light trade. Dow Jones is 76 points lower, while Nasdaq is down 58 points.

LIVE CATTLE:

Opening call: 50 to 70 cents Lower. Moderate follow-through pressure is slowly developing through the live cattle futures, although traders are looking for late week cash market support. The inability for futures buyers to hang on at the end of the week continues to show the lack of depth in the market and uncertainty about pushing nearby contracts above short term technical resistance levels. Cash cattle markets have once again made it to Friday with trade still needing to be done. Packers will need to increase spending limits in order to draw more interest into the market, with current bids redeveloping at $136 to $138 in the South, but unlikely to get much attention. Asking prices are holding firm at $142 in the South and $215 and higher in the North. Open interest Thursday added 878 positions (278,013). Spot February fell 1,588 positions (26,763) and April contracts gained 1,506 positions (119,948). DTN projected slaughter for Friday is 109,000 head.

FEEDER CATTLE:

Opening call: 50 to 80 cents lower. Feeder cattle futures have broken lower early Friday morning, moving away from gains seen earlier in the week following the lower close on Thursday. A concern that buyer interest may be waning at the end of the week could draw additional liquidation through the complex, although given the wide price range over the last couple of months, markets have extensive room to wander without creating any technical alarm. Open interest Thursday added 254 positions (37,128). Cash index for 2/3 is 159.68 down 0.46.

LEAN HOGS:

Opening call: Mixed. Lean hog futures are expected to trade in a narrowly mixed range early Friday with very little market direction expected to be seen given the single digit price shifts seen in nearby contracts. Slightly wider price moves may develop through the morning, but these shifts are likely to be seen through deferred contracts, and may have a muted impact on market fundamentals. Cash bids are expected to be steady. Open interest Thursday added 3,130 positions (188,231) Spot month February fell 572 positions (20,702) and April added 1,784 positions (78,155). Cash lean index for 2/3 is 63.98, up 0.68. DTN projected slaughter for Friday is 425,000 head with 199,000 head expected Saturday.

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

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]
P[R1] D[300x250] M[300x250] OOP[F] ADUNIT[] T[]
P[R2] D[300x250] M[320x50] OOP[F] ADUNIT[] T[]
DIM[1x3] LBL[] SEL[] IDX[] TMPL[standalone] T[]
P[R3] D[300x250] M[0x0] OOP[F] ADUNIT[] T[]

Rick Kment