DTN Before The Bell Livestock

LIVE CATTLE:

Open: 12 cents higher. December cattle are trading down 15 cents early Friday with early bearish influence from outside markets. Just as last week's selling flushed noncommercial net longs out of the market, Thursday's open interest figures and higher prices show the short side of the market was sent fleeing Thursday. Slaughter has been active, but Thursday's slaughter stumbled to 114,000, down from 118,000 a year ago. Dow Jones estimates Friday's slaughter at 119,000. Cash trade has been light this week and many will be watching for trade to pick up later Friday. Thursday's boxed beef price was up $1.53 to $207.32 for choice cuts and up $1.65 to $191.23 for selects on 156 loads. Technically, December live cattle are correcting back from a four-month uptrend and are holding above support near $100.70, the June low. Thursday's rally in December cattle neared the 100-day average at 108.80. Total open interest was down 3,114 at 276,797 on Thursday's higher trade. December contracts were down 3,725 at 104,071 and February contracts were down 248 at 66,585.

FEEDER CATTLE:

Open: 65 cents higher. January feeder cattle are down 2 cents early, holding most of its gains for the week with prices vulnerable to end of month adjustments Friday. A drier forecast and warmer temperatures have returned to the central U.S. Plains and are expected to hang around next week. The Feeder Cash index is listed at $134.34 for Oct. 28, up $0.33 from a week ago, but lower than where it was earlier this fall. From a technical viewpoint, January feeder cattle are correcting their previous four-month rally and have held support at the six-month low near $125.00. The 100-day average offers resistance at $138.20. Total open interest was down 1,052 at 43,957 on Thursday's higher trade, a sign of short-covering. November contracts were down 674 at 4,644 and January contracts were down 463 at 24,210.

LEAN HOGS:

Open: 82 cents higher. December hogs are up 77 cents early Friday, possibly finding short-term support after Thursday's prices dipped near $64.00. There has been no effort to regain last week's high of $72.80 however and that may stand as the peak of the fourth quarter. The most bullish factor for hog prices lately has been the CME's Lean Hog Index trading at $75.49 on Oct. 28, still roughly $10 above the December contract. The index has been sliding lower however and carcass values are also down from their recent highs above $100. Pork carcass increased $3.05 to $87.57 Thursday, helped by a $14.24 gain in hams. Thursday afternoon's negotiated national hog price of $61.70 is below the swine formula price of $72.55, a narrower spread that still shows hogs are available to packers. Thursday's hog slaughter was estimated at 492,000, even with a year ago. Dow Jones estimates Friday's slaughter at 488,000. Thursday's packer margin was increased to $48.35 per head, enough to keep packers buying. Total open interest was down 478 at 217,362 on Thursday's lower trade. Open interest in the December contract was down 1,933 at 80,735 while February contracts were up 1,206 at 51,089.

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

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