DTN Before The Bell Livestock

GENERAL COMMENTS:

Strong triple-digit gains in nearby lean hog futures is causing traders to adjust early-week positions. The focus on potential pork demand growth comes as pork values have regained buyer support during early-week trade. Cattle futures remain mixed in limited volume Tuesday morning. Corn is trading higher in light to moderate trade. Stock markets are mixed in limited morning trade. Dow Jones is 12 points lower with NASDAQ up 48 points.

LIVE CATTLE:

Open: 10 to 70 cents lower. Narrow losses have trickled back into live cattle trade as trades appear to be taking a break from the moderate to sharp losses seen early in the week. Concerns of further beef demand growth during the end of September and early October is the biggest limitation of futures activity through the complex. Traders also remain cautious given the upcoming cold storage and cattle on feed reports this week. This could lead to moderate price adjustments over the next few days. Cash cattle markets are quiet with most activity likely to be pushed off until later in the week. Asking prices and bids are still hard to pin down and may not develop until near midweek. Open interest slipped 54 positions (296,811). October contracts lost 3,474 positions (38,699) and December contracts added 2,591 positions (119,655). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Limited direction is seen in feeder cattle futures Tuesday as traders try to focus on the potential moves in grain and live cattle trade through the week. September futures are holding moderate gains with traders main focus on October through January futures which have posted narrowly mixed price direction Tuesday. The upcoming cattle on feed report Friday may add some additional price shifts, although increased placements will not shock the market, and should be already factored into current price levels. Cash index for 9/18 is $141.98, down 0.20. Open interest Monday added 187 positions (43,042).

LEAN HOGS:

Open: Steady to $2.50 higher. Lean hog futures have shaken off the widespread early-week pressure, which led to sharp losses Monday. This has created increased momentum in all nearby contracts as traders still have very limited understanding of just how aggressive export buying will change over the next several weeks. The downward pressure in the last week has quickly squashed most traders fears that further aggressive losses will develop. This could allow prices to hold between $65 and $70 per cwt in nearby contracts as traders look for additional changes in pork supplies and further export sales reports. Cash hog bids are expected $1 lower to $2 per cwt higher, with most bids steady to $1 higher. Open interest added 203 positions (223,827). October slipped 1,662 positions (32,793) and December added 151 positions (94,864). Cash lean index for 9/18 is $71.29, up 1.61. DTN projected slaughter for Tuesday is 486,000 head. Saturday runs are expected near 220,000 head.

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

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