DTN Before The Bell Livestock

Livestock Start Higher Friday

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN photo by Nick Scalise)

LIVE CATTLE:

Open: 7 cents higher. October cattle are up $0.50 quickly, helped by a modest rebound in U.S. stocks and also possibly finding support after falling back from the August high of $111.15. The slaughter pace has been more helpful this summer, but restaurant demand is slow to return with coronavirus still a bearish concern. USDA estimated Thursday's cattle slaughter at 118,000, up from 117,000 a year ago. So far, cash sales were reported at $102 and $103 this week for live cattle, $162 and $163 for dressed -- both lower than last week. This week's lower cash trade follows lower negotiated volumes last week and are a sign of how packer interest has slowed. Thursday's boxed beef landed at $227.24 for choice, down roughly $2 from last Friday. Selects were at $212.50, also roughly $2 lower from last Friday. Technically, October live cattle are correcting from a recent uptrend and are close to testing support at $102.50. Total open interest was up 491 at 293,754 on Thursday's lower trade and is up roughly 6,000 from a month ago. October contracts were down 4,138 at 103,050 and December contracts were up 2,608 at 76,246.

FEEDER CATTLE:

Open: 27 cents higher. October feeder cattle are up 47 cents early Friday, finding early support near the 100-day average at $138.00 after three weeks of lower prices. Much like cattle, feeders are benefiting from a return of consistent slaughter levels through the summer, but still have institutional demand concerns related to coronavirus issues. The Feeder Cash index for September 2 is listed at $139.68, down $3.34 from a week ago and has become a slow drag on futures prices. From a technical viewpoint, October feeder cattle have fallen back from five-month highs in August and are testing an early level of support near $138.00. If that does not hold, the next level of support can be expected near $130.00. Total open interest was down 34 at 43,163 on Thursday's lower trade. September contracts were down 379 at 3,761 and October contracts were down 101 at 17,427.

LEAN HOGS:

Open: 65 cents higher. October hogs are up 55 cents early Friday, continuing to benefit from Thursday's report of higher export sales, thanks largely to China and Mexico. After Thursday's bullish export sales, pork carcass responded higher, ending at $80.19 and now up nearly $9.00 from last Friday. Negotiated hog prices have crept above $46 and indicate hog supplies are gradually coming back to less burdensome levels. USDA estimated Thursday's hog slaughter at 480,000, up from 466,000 a year ago. Pork cutouts ended at $80.19 on 323.49 loads Thursday, up nearly $9.00 from last Friday. Thursday's packer margin was estimated by Dow Jones at $66.84 per head, plenty of incentive for packers to keep buying. The Lean Hog Index for September 2 was posted at $58.13, up $1.01 from last week and roughly $1.00 below the October futures contract. Total open interest was up 1,045 at 221,112 on Thursday's higher trade. Open interest in the October contract was down 2,415 at 88,425 while December contracts were up 2,461 at 63,258.

Todd Hultman can be reached at Todd.Hultman@dtn.com

Todd Hultman