DTN Before The Bell Livestock

GENERAL COMMENTS:

Livestock traders are slow to step back into the market as all eyes are on the grain market and the overall impact moves in corn and soybean meal prices will have on cattle and hog futures. Feeder cattle futures remain the most active complex with moderate early losses focusing on continued active gains in grain trade. Corn is higher in light to moderate trade. Stock markets are higher in limited morning trade. The Dow Jones Index is 93 points higher with NASDAQ up 92 points.

LIVE CATTLE:

Open: Mixed. A combination of follow-through selling pressure and short-covering is seen early Friday morning. The tone of the market remains extremely weak with further market pressure likely given the feeder cattle complex showing additional signs of market losses and concern that further grain market support will add longer-term weakness to the cattle complex. Although December futures are still holding above $112 per cwt based on expected tighter meat supplies in the upcoming weeks, the lack of short-term support may keep prices within a narrow to moderate sideways trading range. Cash cattle activity remains quiet Friday morning, although additional trade is thought ito be needed in all areas. Asking prices are holding at $110 per cwt live in the South, although Northern asking prices are a little harder to pin down. Trade Wednesday was seen at $107 to $108 live and $168 to $169 per cwt. This is generally steady to $1 higher than last week, but steady to weak from midweek levels. The pressure in futures trade and softness in beef values may limit end of the week cash market support. Open interest slipped 5,409 positions (285,078). October contracts lost 1,174 positions (11,184) and December contracts fell 2,494 positions (118,724). DTN projected slaughter for Friday is 118,000 head.

FEEDER CATTLE:

Open: Steady to 60 cents Lower. Follow-through pressure is seen in feeder cattle trade as grain markets continue to surge higher. The focus on potential significant changes in grain stocks in Friday morning's WASDE report could add even more fuel to the grain market, causing increased concerns about feed costs for cattle production. This could further weaken nearby and deferred feeder cattle contracts before the end of the week. Although November futures are still holding above the next support level of $134 per cwt, continued gains in corn prices could quickly breech these levels. Cash index for 10/7 is $142.60, down 0.11. Open interest Thursday fell 511 positions (42,657).

LEAN HOGS:

Open: Mixed. Traders appear to be taking a breather early Friday, although light to moderate follow-through buying is seen in nearby contracts. The sharp, triple-digit rally in nearby contracts Thursday has created strong market momentum, but traders will need to see confirmation from cash and pork values over the coming days in order to maintain the upward price trend. Single-digit losses are seen in deferred futures as traders are focusing more on covering positions at the end of the week rather than setting new and higher market trends. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady to 50 cents higher. Open interest rallied 1,435 positions (226,935). October slipped 1,644 positions (11,807) and December fell 496 positions (93,870). Cash lean index for 10/7 is $77.62, up 0.12. DTN projected slaughter for Friday is 485,000 head. Saturday runs are expected near 283,000 head.

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

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