DTN Before The Bell Livestock

Prices Firm Early Wednesday

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

GENERAL COMMENTS:

Firm gains are quickly developing across the livestock complex with feeder cattle markets once again setting the pace for higher cattle trade due to less focus on grain prices, and more emphasis on beef and cash cattle prices. Hog markets are mixed with nearby contracts bouncing off earlier lows. Corn prices are lower in light to moderate activity. Stock markets are mixed in limited morning trade. Dow Jones is 104 points higher with NASDAQ down 8 points.

LIVE CATTLE:

Open: Steady to 50 cents Higher. Firming buyer support is seen Wednesday morning following continued support in boxed beef and cash cattle markets through the week. The focus of the industry still seems to be very short-term focused with the expectation of moderate to firm product and price support moving through the Labor Day holiday weekend. Less attention is being given to the backlog of cattle from earlier in the spring as the light placements seen during the first quarter are now starting to move through the system. This is leaving a mix of younger and older cattle being sold, creating less consistency in grading systems. Cash cattle markets are slow to develop Wednesday morning following initial trade Tuesday at higher prices. Prices are generally $2 to $3 per cwt higher than last week's average, but significantly more cattle are expected to be traded before the end of the week. Although the tone of the market could be established in the South, the expectation that more trade in the North is needed before a market trend can be developed could spark some additional midweek market support. Open interest gained 570 positions (291,072). August contracts lost 1,719 positions (5,631) and October contracts slipped 247 positions (124,893). DTN projected slaughter for Wednesday is 119,000 head.

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FEEDER CATTLE:

Open: 50 cents to $1 Higher. Firm gains are seen Wednesday morning in nearby feeder cattle futures with traders continue to back away from early week pressure associated with higher grain prices. Although corn markets have not given back most of the recent gains, there seems to be much less concern about aggressive feed price gains through the end of the year based on expected yields. This is putting more emphasis on the recent support in cash feeder cattle and live cattle prices and underlying support in beef values going into Labor Day. Cash index for 8/17 is $142.63, up 2.43. Open interest Tuesday gained 521 positions (46,295).

LEAN HOGS:

Open: Mixed. Following sharp triple-digit losses in nearby contracts Tuesday, traders are showing much more confidence that recent price ranges may be able to hold as buyers are slowly re-owning nearby positions, pushing prices higher. Trade remains mixed in a narrow market range, although the ability to break away from widespread liquidation seen Tuesday is helping to create market calmness through the entire complex. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady to 50 cents lower. Open interest fell 1,767 positions (219,192). October fell 925 positions (100,213) and December added 47 positions (51,352). Cash lean index for 8/17 is $54.81, up 0.97. DTN projected slaughter for Wednesday is 482,000 head. Saturday runs are expected at 244,000 head.

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

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Rick Kment