DTN Before The Bell Livestock

GENERAL COMMENTS:

Cattle futures are mixed with light follow-through pressure in feeder cattle trade tempered by narrowly mixed live cattle futures. Hog markets have shown increased underlying support as nearby futures are testing short-term resistance levels once again based on continued support in cash and pork values. Corn remains higher in light to moderate trade. Stock markets are lower in limited morning trade. Dow Jones is 140 points lower with NASDAQ down 2 points.

LIVE CATTLE:

Open: Mixed. Live cattle futures remain mixed in limited activity. The focus on early-week losses and pressure in deferred futures has limited the previous market gains, although limited short covering is helping to bring stability back to the market. Trade volume is expected to remain light through most of Tuesday. Cash cattle activity remains quiet with a asking prices in the South seen at $106 to $107 per cwt. A few cattle sold Monday in Texas at $105 per cwt. This is $1 lower than last week, but the limited amount of activity is too early to establish a market trend at this point. The pullback in futures trade is curbing some expectations of cash market support through the end of the month of August, but feeders still point to gains in boxed beef values, which could help to spark market support in the next couple of days. Packer interest is expected to be limited through the day with most activity expected late in the week. Open interest gained 1,284 positions (295,992). August contracts lost 581 positions (2,311) and October contracts slipped 607 positions (123,670). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: Steady to $1 lower. Early pressure continues to be seen in feeder cattle trade, although the intensity seen Monday has slowed significantly as traders try to find market stability. The focus on limited buying in live cattle trade is helping to stem follow through selling pressure although the tone of the market remains generally weak. Cash index for 8/21 is $144.04, up 0.14. Open interest Monday fell 1,189 positions (46,300).

LEAN HOGS:

Open: Steady to 50 cents higher. Firm follow-through buying is seen in nearby lean hog futures. The overall lack of pressure in the complex over the last couple of days is helping to sustain last week's market rally, but upside market potential still remains limited. Growing concern about pork demand following Labor Day is likely to limit follow through buying in futures and cash markets, although traders continue to test short term resistance levels given the continued gains in pork cutout values. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady to 50 cents higher. Open interest added 841 positions (217,497). October slipped 645 positions (99,478) and December added 1,011 positions (53,950). Cash lean index for 8/21 is $56.06, up 0.55. DTN projected slaughter for Tuesday is 485,000 head. Saturday runs are expected at 270,000 head.

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

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