DTN Before The Bell Livestock

GENERAL COMMENTS:

Sharp losses are seen in cattle and hog futures with lean hog futures leading the shift lower Friday morning. The break away from recent market highs could signal that a seasonal top has been set as traders start to adjust positions at the end of August, as limited activity may be seen Monday. Corn is trading lower in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 25 points higher with NASDAQ up 56 points.

LIVE CATTLE:

Open: 50 cents to $1 lower. Firm pressure is seen in all live cattle trade with October futures unable to gain any sense of end-of-week support. The lack of strong boxed beef movement Thursday and cash cattle market weakness may continue to lead to further pressure over the near future. Cash cattle trade still remains light Friday morning, but the weaker trend developing during the week is likely to spark additional trade Friday. So far feeders are holding on to previous asking prices, but this may be hard to do as the day continues as overall movement next week may be even lighter due to the holiday weekend. Open interest fell 724 positions (297,339). August contracts lost 682 positions (889) and October contracts slipped 1,615 positions (121,796). DTN projected slaughter for Thursday is 119,000 head.

FEEDER CATTLE:

Open: Steady to $1 lower. Sharp losses have once again developed across the feeder cattle futures with September futures testing support levels of $140 per cwt. A move below this level would likely create additional bearish technical pressure through early September. The end of the week close of feeder cattle trade is more closely watched than daily moves, which would indicate a trend for lower prices that may continue past the Labor Day weekend. Cash index for 8/25 is $143.62, down $0.02. Open interest Thursday added 175 positions (44,885).

LEAN HOGS:

Open: Steady to $2 lower. Active pressure is renewed with aggressive selling developed in nearby contracts as traders quickly back away from previous highs. The lack of pressure in deferred contracts has limited the overall scope of market weakness through the morning with sharp losses limited to 2020 contract months. October futures are leading the market lower with prices $1.90 per cwt lower, and moving below $54 per cwt once again. This could quickly change the tone of the market over the near term, although the widening premium to summer 2021 contracts does not suggest a long term change in market expectations. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady to 50 cents higher. Open interest fell 879 positions (217,709). October slipped 1,821 positions (97,297) and December added 235 positions (54,646). Cash lean index for 8/21 is $56.06, up 0.55. DTN projected slaughter for Friday is 482,000 head. Saturday runs are expected at 273,000 head.

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

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