DTN Before The Bell Livestock

Cattle Futures Ease in Sluggish Trade

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)

GENERAL COMMENTS:

Narrow to moderate losses in cattle futures are pulling back from Monday's gains, although continued trade within the current ranges will do very little to change market direction. Hog futures are holding narrow gains on expectations that further pork price support develops as the week continues. Corn is trading mixed in light to moderate trade. Stock markets are mixed in limited morning trade. Dow Jones is 173 points lower with NASDAQ up 53 points.

LIVE CATTLE:

Open: Steady to 50 cents lower. Light pressure is seen in all live cattle futures with limited activity seen Tuesday. Without any major shifts in trader intentions in front of the holiday break, prices are likely to wander within a mixed but sideways trading pattern. The monthly cold storage report will be released following market close. Although this is not expected to shift markets significantly, a significant shift in inventory from year-ago levels could bring in moderate adjustments over the next couple of days. Cash cattle activity is quiet with bids and asking prices still hard to pin down. Given the holiday schedules at the end of the week, trade is expected to develop over the next two days. Open interest added 291 positions (286,808). December contracts lost 874 positions (3,861) and February contracts slipped 891 positions (113,864). DTN projected slaughter for Tuesday is 120,000 head.

FEEDER CATTLE:

Open: Steady to 60 cents lower. Feeder cattle futures are slowly giving back most of Monday's gains in the early minutes of trade Tuesday. The underlying focus in the complex has little to do with market direction as traders appear to be adjusting positions following the recent market rally as limited trade volume is expected through the rest of the week. This will likely keep prices range bound through the rest of the session as traders look for outside market moves and cash cattle trade developments. Cash index for 12/18 is $139.56, up 1.08. Open interest Monday added 567 positions (45,216).

LEAN HOGS:

Open: Steady to 50 cents higher. Limited buying has trickled back into the lean hog complex with most contracts holding single-digit gains Tuesday morning, although firm support is seen in spot month February futures based on support in pork values early in the week. Limited positioning is likely to be seen over the next couple of days in front of the hogs and pigs report. Although significant market moves are not likely to develop during the holiday week. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents lower. Open interest added 1,283 positions (182,165). February fell 261 positions (79,064) and April added 291 positions (41,097). Open interest in pork cutout futures added 19 positions (641). Cash lean index for 12/18 is $62.55, down 1.17. DTN projected slaughter for Monday is 480,000 head. Saturday runs are expected at 63,000 head.

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

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Rick Kment