DTN Before The Bell Livestock

GENERAL COMMENTS:

Interest in livestock futures trade has slowed significantly Friday morning following strong gains in live cattle and lean hog futures Thursday. Traders appear to be more focused on end-of-week positioning than any active market direction shifts. Narrow price shifts are likely to continue through most of the day without a significant shift in outside market direction. Corn is trading higher in light to moderate trade. Stock markets are lower in limited morning trade. Dow Jones is 126 points lower with NASDAQ down 124 points.

LIVE CATTLE:

Open: Mixed. Live cattle futures trade remains mixed in a narrow range Friday morning. The lack of overall market direction and volume moving back into the market is keeping prices from 10 cents lower to 12 cents higher in most contracts. December futures are having a hard time drawing additional buyer support, but the limited single-digit losses in spot-month contracts are more likely a factor of traders positioning contracts rather than a change in market direction. Fundamentally and technically, Friday's trade is likely to remain undeveloped, allowing prices to wander back and forth within a narrow to moderate range. Traders will continue to closely focus on outside market moves, which may play a bigger factor in trade activity than cash trade or boxed beef movements. Additional cash trade volume is likely to develop Friday, although at this point, it is uncertain and generally unlikely that significant price shifts will be seen from where trade developed Wednesday and Thursday. Midweek cash trade developed at $106 to $107 live and $163 to $167 dressed, mostly $166 to $167. These prices are steady to $1 per cwt higher on a live basis from last week, while as much as $4 per cwt higher dressed basis. Moderate volume through the day Friday is expected due to the expected very light trade already seen during the previous few days. Overall totals are still likely to remain relatively light once the week is over, unless a major shift is seen in futures or boxed beef values. Open interest added 3,288 positions (279,921). December contracts lost 3,072 positions (92,045) and February contracts added 3,999 positions (74,759). DTN projected slaughter for Friday is 118,000 head.

FEEDER CATTLE:

Open: Steady to 15 cents higher. Narrow gains trickled into the complex early Friday morning as traders try to find a sense of late week stability following concerns of higher production costs surrounding elevated feed prices. It is uncertain how much initial buying activity remains, which could allow for light to moderate morning pressure to develop due to limited trade volume expected through most of the day. Although there is increased focus on the direction and activity in live cattle and wholesale beef values, the feeder cattle market will continue to be heavily influenced by outside markets and grain trade through the end of the week. This could keep nearby contract prices shifting higher and lower through most of the session. Cash index for 11/4 is $137.91, down 0.66. Open interest Thursday fell 505 positions (39,511).

LEAN HOGS:

Open: Mixed. A combination of light follow-through buying and position covering is developing Friday morning with lean hog futures holding narrow trading range in very limited activity at opening bell. December futures have posted 10 to 25 cent losses as traders try to adjust to the triple digit gains over the last couple of days, but the tone of the market remains generally steady as traders look for further support from pork values at the end of the week and stability in cash hog values. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady to firm. Open interest added 6 positions (215,877). December fell 1,785 positions (74,386) and February gained 1,518 positions (55,240). Cash lean index for 11/4 is $71.52, down 0.53. DTN projected slaughter for Friday is 488,000 head. Saturday runs are expected at 260,000 head.

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

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