DTN Before The Bell-Livestock

Cattle Futures Trickle Lower

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

Limited pressure in light trade is eroding live cattle futures early Wednesday morning. This may add some additional market softness as the session continues, but losses seem to be well contained following recent market surges.

Light to moderate pressure has slowly developed in cattle futures early Wednesday. This is adding to market softness this week. There is follow-through support in lean hog trade following strong triple-digit gains Tuesday. Corn markets are higher in light early trade Wednesday. Stock markets are mixed, Dow Jones is 127 points higher, and Nasdaq is down 10 points.

LIVE CATTLE:

Open: 20 to 30 cents lower.

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There is light pressure in the entire live cattle complex. Limited activity Tuesday has kept traders unwilling to step back into the market as traders look for additional market moves in both beef market fundamentals, as well as overall shifts in outside markets. Limited volume is likely through most of the midweek session, but the narrow losses could bring some additional price movement later in the day. Cash cattle activity remains at a standstill through the first half of the week. Some increased bid interest is expected through the day from packers, but for the most part, trade is likely to be pushed to the end of the week. Open interest Tuesday gained 4,744 positions (319,569). Spot month October contracts lost 1,711 positions (56,564) and December contracts added 3,176 positions (110,276). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Open: 20 to 40 cents lower.

Follow-through losses have quickly developed early Wednesday morning, although trade volume remains limited and the overall lack of support continues to focus on sluggish market activity following triple-digit losses earlier in the week. At this point, traders are not overly concerned about the price pressure building in the feeder cattle market due to the aggressive market support that has pushed prices to contract highs last week. Front-month futures are still over $8 per over short-term lows set in August. Given the support seen in live cattle trade and expected grain market pressure, light buyer support may redevelop through the end of the month. Cash index for 9/17 is listed at $153.62, up 0.24. Open interest Tuesday added 1,605 positions (54,273).

LEAN HOGS:

Open: Mixed.

Early trade remains mixed to mostly higher with front-month October futures holding the most aggressive support of 95 cents per cwt. This is helping to spark additional underlying support through the entire complex as spot month futures have now moved above $60 per cwt for the first time since June in the October contract. Strong underlying support continues to hold in summer 2019 contracts with prices holding a $20 per cwt premium as traders focus on long-term support and the potential for increased overall supply shifts over the near future. Cash hog trade Wednesday is expected steady to $2.00 higher. Most bids are $1.50 Higher. Open interest Tuesday added 600 positions (219,568). Spot-month October fell 2,324 positions (36,895) and December added 2,058 positions (98,185). Cash lean index for Sept. 17 is $53.62 up 1.10. DTN projected slaughter for Wednesday is at 432,000 head. Saturday estimates are seen at 192,000 head.

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

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Rick Kment