DTN Before The Bell Livestock

GENERAL COMMENTS:

Limited activity is seen in cattle and hog futures Monday morning, although lack of follow-through buyer support in lean hog futures is setting a weaker tone across the entire complex. Mixed cattle trade is developing despite initial market pressure as traders try to cover short positions following last week's market weakness. Corn is trading lower in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 122 points higher with NASDAQ up 182 points.

LIVE CATTLE:

Open: Mixed. Limited direction is seen in live cattle trade Monday morning with most traders willing to hover on the sidelines waiting for direction later in the week. Narrow to moderate losses are focusing on the pressure late last week, although a break in grain market support is helping to spark limited price gains in deferred contracts. The focus on beef market strength through the first half of 2021 continues to build momentum, although it is important that long term market decisions are not made on holiday moves such as Monday's limited activity. Cash cattle are quiet and will likely remain that way through the entire day. Show list distribution and inventory taking is expected to be the extent of cash market activity Monday. Bids and asking prices are not expected until later in the week. Open interest gained 1,139 positions (286,217). October contracts lost 1,161 positions (10,161) and December contracts added two positions (118,726). DTN projected slaughter for Monday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Initial follow-through selling pressure flooded the market early Monday morning, although the combination of limited trade volume and lower corn prices quickly caused feeder cattle trade to change direction after the initial sell orders cleared the complex. This change in direction opened the door for additional market support, allowing nearby contracts to shift 20 to 50 cents higher as the lack of follow-through pressure is allowing buyers to fill the void. Limited volume is likely to be seen through the rest of the session, although prices could see some additional support before closing bell. Cash index for 10/8 is $141.92, down 0.68. Open interest Friday added 108 positions (42,766).

LEAN HOGS:

Open: Mixed. Although front-month October lean hog futures have continued to shift higher Monday morning, the focus on limited losses developing through the rest of the complex has allowed for markets to stabilize after last week's price surges. Very light trade volume is expected to be seen during the Columbus Day holiday. Even though futures markets remain open, holidays such as these typically seem to gain very limited interest with no significant market movement expected to develop. Traders will continue to focus on market moves in cash and pork values as well as paying attention to any disruption in processing schedules early in the week. The underlying firmness in the market is likely to continue later in the week despite any price shifts Monday. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady to 50 cents higher. Open interest rallied 2,109 positions (229,013). October gained 310 positions (12,087) and December fell 225 positions (93,644). Cash lean index for 10/8 is $77.71, up 0.09. DTN projected slaughter for Monday is 487,000 head.

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

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