DTN Before The Bell Livestock

Livestock Futures Stabilize Early Monday

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

GENERAL COMMENTS:

Initial buyer support is seen in all livestock trade, although cattle futures are showing the most significant improvement with early trade 30 to 80 cents higher as traders cover short positions seen Friday. Hog futures are limited to single-digit gains at opening bell, which may continue to narrow the trading range through the rest of the session. Corn is trading higher in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 216 points higher with NASDAQ up 147 points.

LIVE CATTLE:

Open: Steady to 50 cents higher. Early gains are slowly developing in live cattle trade. The ability to spark follow-through buying interest following initial short covering Monday morning will be essential in helping sustain the upward price movements seen Monday morning. December contracts continue to lead the complex higher with traders looking for further support in cash values while more direction on beef cutout market direction is being sought by many traders. Outside markets will continue to be a larger factor through the week with traders not only paying close attention to feeder cattle trade, but grain and stock markets will have a more significant impact through the month of October. Cash cattle markets are extremely quiet Monday morning following firm gains seen last week. The pullback in futures prices Friday could limit early week optimism as show lists are distributed Monday. Bids and asking prices are not likely to be seen until later in the week with hopes and expectations that market firmness in futures and boxed beef values will be seen as the week continues. Open interest slipped 7,080 positions (295,052). October contracts lost 6,963 positions (15,726) and December contracts fell 1,651 positions (123,583). DTN projected slaughter for Monday is 120,000 head.

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FEEDER CATTLE:

Open: Steady to 60 cents higher. Initial short covering was the focus across feeder cattle futures with traders posting moderate to firm gains in all contract months at opening bell. The triple digit losses flooding into the market late last week added concerns of further technical pressure developing in the market as weekly charts dipped below $140 per cwt in November contracts. The ability to sustain prices above the $140 per cwt will likely fend off additional market liquidation and could add further short term support to the complex. Cash index for 10/1 is $142.96, up 0.58. Open interest Friday added 477 positions (43,999).

LEAN HOGS:

Open: Mixed. Narrow trading ranges are seen in nearby and deferred lean hog futures trade Monday morning. Although prices have bounced higher in all but spot October contracts, the limited gains in nearby contracts is causing some concerns about the sustainability of buyer interest as the session continues. Strong pressure in pork cutout values Friday has caused some growing concerns that overall demand may not continue to develop over the near future as packers continue to maximize procurement schedules through early October. Not only is the industry concerned about getting the larger volume of hogs processed and into coolers, but the concerns surrounding steady demand growth over the next several months hinges on the ability to aggressively increase export movements. This will become a challenge if the U.S. doesn't get a larger portion of the global market share previously held by Germany. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady to firm. Open interest added 1,407 positions (230,183). October slipped 1,582 positions (21,422) and December added 619 positions (96,004). Cash lean index for 10/1 is $76.81, up 0.07. DTN projected slaughter for Monday is 487,000 head.

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

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Rick Kment