DTN Before The Bell-Livestock

Livestock Futures Slide Lower

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

Firm losses have developed through livestock trade as traders react to the sharp gains seen Wednesday. A moderate market correction is being seen in cattle and hog trade, although limited early volume may be adding to the overall pressure during initial trade. Corn markets are mixed in light early trade Thursday. Stock markets are higher, Dow Jones is 180 points higher while Nasdaq is up 71 points.

LIVE CATTLE:

Open: 10 to 50 cents lower. Light pressure is slowly moving into live cattle futures. This is adding to the volatility after strong triple-digit gains developed in nearby contracts. This overall lack of support in the complex continues to spark some market activity as traders adjust markets lower with profit-taking opportunities developing. October futures are likely to lead the complex lower through the morning, although as more volume moves back into the complex, prices could quickly become more volatile. Cash cattle markets remain generally quiet with only a handful of cattle traded thus far in the north. This has not yet set a trend for the market, although as the week progresses, more activity is expected to be seen as packers become more aggressive. Given the lack of firmness in beef values, packers are expected to defend margins, but feedlot managers are expected to hold tight to higher asking prices as recent futures gains coming to their defense. Open interest Wednesday fell 3,123 positions (299,070). Spot-month October contracts lost 10,080 positions (75,663) and December contracts added 3,368 positions (92,507). DTN projected slaughter for Thursday is 118,000 head.

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FEEDER CATTLE:

Open: 20 to 60 cents lower. Many traders seem willing to hover on the sidelines early Thursday morning until more market direction develops. Traders that have moved into the complex are focusing on market correction with the aggressive triple-digit support seen Wednesday adding to the overall volatility in the entire complex. There is growing uncertainty through the entire complex with September feeder cattle futures still holding above $154 per cwt, but unable to regain earlier market support. Cash index for 9/11 is listed at $152.63, up 0.54. Open interest Wednesday added 127 positions (50,707).

LEAN HOGS:

Open: Steady to 70 cents lower. Widespread pressure is quickly moving into livestock futures with traders backing away from midweek gains as they try to adjust market positions due to expected volatility still remaining strong in the complex. Front-month October futures has led the market lower with a 75 cent per cwt loss. Traders seem to be unwilling at this point to buy into the recent firmness in the complex, but the extremely light trade seen at opening bell is not giving a good test to the complex. Cash hog trade Thursday is expected $1 to $1.50 higher. Most bids are $1.00 per cwt higher. Open interest Wednesday added 2,796 positions (223,748). Spot-month October fell 6,671 positions (59,146) and December added 6,768 positions (83,948). Cash lean index for 9/11 is $48.49 up 0.94. DTN projected slaughter for Thursday is at 414,000 head. Saturday runs are expected at 160,000 head.

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

(SK)

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Rick Kment