DTN Before The Bell-Livestock

Cattle Futures Expected Lower on Follow-Through Pressure

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

Cattle futures are expected to trade moderately lower in follow-through pressure based on lackluster interest in cash markets late last week as well as softness in futures trade last week. This pressure is not expected to create any significant direction change technically which will allow markets to wander in a moderate price pattern through most of the week. Corn futures are trading lower in light early trade. Stock markets are lower in light trade. Dow Jones is 261 points lower, while Nasdaq is down 84 points.

LIVE CATTLE:

Opening call: 50 to 70 cents Lower. Light to moderate pressure is likely to redevelop early Monday morning following lack of activity in cash markets last week as well as the inability for futures trade to draw buyer support back into the market late last week. The lack of support in the complex seen in the market may continue to draw increased selling interest, especially in front month contracts which are trading at the top end of short term ranges. Cash cattle markets are likely to start Monday with show list distribution and inventory taking typical for early week activity. But the lack of activity late last week seen will likely put more pressure on the need to do business sooner than later and should increase show lists. It is uncertain just how much interest will be seen early in the morning but futures movement and outside activity will likely play a big part in early cash market direction also. Open interest Friday fell 4,763 positions (273,282). Spot February fell 5,807 positions (20,983) and April contracts gained 808 positions (120,756). DTN projected slaughter for Monday is 108,000 head.

FEEDER CATTLE:

Opening call: 50 to 80 cents lower. Follow-through pressure is expected to develop through early trade following the sharp triple-digit pressure seen across the complex. The focus on technical market pullbacks seen late last week within the current market range is likely to create additional market volatility through the trading session. It is very likely that market shifts may continue to be seen through the first part of the week, with very little long-term direction developing over the near future. Open interest Friday added 1,183 positions (38,251). Cash index for 2/3 is 159.68 down 0.46.

LEAN HOGS:

Opening call: Mixed. Lean hog futures are expected to trade in the same narrow direction seen over the last couple of weeks as light to moderate price support is expected to trickle into the complex early Monday following cash market activity. The lack of direction support may continue to limit additional interest through the month, leaving most traders on the sidelines for most of the month. Cash bids are expected to be steady to $1 higher with most bids steady. Open interest Friday added 2,570 positions (190,799) Spot month February fell 1,477 positions (19,225) and April added 1,641 positions (79,225). Cash lean index for 2/3 is 63.98, up 0.68. DTN projected slaughter for Monday is 405,000 head.

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

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Rick Kment