DTN Before The Bell-Livestock

GENERAL COMMENTS

Early moves in livestock trade are mixed with most cattle futures hanging onto early market gains, while the lean hog complex is developing moderate pressure. There is likely to be some additional pressure in the hog complex as traders focus on adjusting positions through the end of the month. Corn markets are steady in light early trade. Stock markets are higher, Dow Jones is 54 points higher while Nasdaq is up 16 points.

LIVE CATTLE:

Open: 40 to 50 cents higher. Moderate support is moving through the complex with traders focusing on underlying buyer activity that started to develop Tuesday. The continued support seen through the complex is helping to push most nearby contracts 40 to 50 cents per cwt higher based on expected firm beef market moves and limited moves in grain trade. Cash cattle interest remains generally sluggish with just a few bids developing through the North Tuesday. It is expected that packers will float these bids once again through the day with the more interest developing. Asking prices are likely to become much more defined and available through the day. But most do not feel that active trade will quickly develop unless a major shakeout is seen in futures trade. This will likely push most trade until Thursday or Friday. Open interest Tuesday gained 2,799 positions (326,995). Spot month October contracts lost 225 positions (42,197) and December contracts added 1,471 positions (120,606). DTN projected slaughter for Wednesday is 118,000 head.

FEEDER CATTLE:

Open: Mixed. Feeder cattle futures are mixed in a narrow range early Wednesday morning. Front-month futures are posting a sluggish and narrow loss of 12 cents per cwt loss, while the rest of the complex is trading steady to moderately higher. The lack of direction and trade volume in front-month September contracts seems to be the main reason for the price pressure. But traders continue to focus on lack of underlying support in grain trade through the end of September, as well as long-term expectations that beef demand will continue to expand. This is likely to allow for early gains to hold during morning trade. Cash index for 9/24 is listed at $157.83, up 0.53. Open interest Tuesday added 33 positions (54,783).

LEAN HOGS:

Open: 20 to 70 cents lower. Light to moderate pressure has quickly stepped into the lightly traded lean hog complex. This is adding even more uncertainty to the complex with prices in October futures holding a 20 cent gain in the opening minutes of trade. December through April futures are posting the most aggressive pressure as traders seem to be focusing on adjusting positions rather than any new developing activity unfolding in the complex. Traders will closely watch to see if current pressure will hold. If losses expand through the morning, it is possible that additional long term weakness could sweep through the entire complex. Cash hog trade Wednesday is expected $0.50 to $1.50 higher. Most bids are $1 higher. Open interest Tuesday gained 1,135 positions (217,135). Spot month October fell 2,102 positions (27,824) and December gained 1,546 positions (99,338). Cash lean index for 9/24 is $62.05 up 1.20. DTN projected slaughter for Wednesday is at 469,000 head. Saturday runs are currently estimated at 217,000 head.

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

(SK)

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