DTN Before The Bell Livestock

GENERAL COMMENTS:

Narrowly mixed trade is seen in most livestock trade as traders react to the sharp gains in cattle futures seen Monday. Feeder cattle futures remain the most vulnerable early Tuesday morning with spot November contracts leading the market lower, although live cattle and lean hog futures remain stuck in quiet trade with prices mixed within a very narrow range. Corn is trading higher in light to moderate trade. Stock markets are mixed in limited morning trade. Dow Jones is 27 points higher with NASDAQ down 153 points.

LIVE CATTLE:

Open: Mixed. Nearby live cattle futures are holding 5 to 20 cent losses, while similar gains are seen in deferred contracts. Compared to widespread triple-digit gains seen Monday, these market moves are relatively meaningless, and likely allowing traders to adjust positions as they look for additional market support. The potential for increased boxed beef values to continue the steady move higher through the day would bring further support to the futures complex, although it is uncertain if fundamental support will be able to hang onto all of Monday's futures gains. Cash cattle markets remain quiet Tuesday morning with just a few asking prices seen early in the week at $112 live and $175 per cwt dressed basis. Given the upward price shift last week and surge in futures and beef values, the expectation is that prices will move higher, but just how much higher is still in question. Active bids may not be seen until midweek, with potential trade dragging on into the end of the week. Open interest fell 2,976 positions (275,636). December contracts lost 11,281 positions (73,726) and February contracts added 3,659 positions (73,726). DTN projected slaughter for Tuesday is 120,000 head.

FEEDER CATTLE:

Open: Mixed. Feeder cattle remain at a near standstill with the inability to gain additional support following near limit moves Monday. Prices are hovering in a narrow but mixed trading range as traders focus more on adjusting positions Tuesday rather than any significant market support developing across the complex. The potential to pull away from Monday's highs is a growing possibility and could spark some additional volatility through the rest of the day. Cash index for 11/6 is $135.58, down 1.05. Open interest Monday fell 1,673 positions (37,324).

LEAN HOGS:

Open: Mixed. Initial trade in lean hog futures has created very limited market activity. Prices are holding from 30 cents lower to 10 cents higher as traders adjust positions following the upward move in nearly all markets Monday. The higher price points seen early in the week and long term optimism surrounding positive possibilities of a COVID-19 vaccine in the coming months will likely keep further bearish moves at bay. But the lack of short-term market news or changes to the demand structure in next couple of months could still limit further upside market potential. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents higher. Open interest liquidated 4,667 positions (208,278). December fell 6,999 positions (61,433) and February gained 1,628 positions (58,007). Cash lean index for 11/6 is $71.74, up 0.62. DTN projected slaughter for Tuesday is 490,000 head, Wednesday expected at 455,000 head. Saturday runs are expected at 278,000 head.

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

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