DTN Before The Bell-Livestock

Pressure Develops Wednesday

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

Moderate to strong pressure is seen through the entire livestock complex with lean hog futures leading the complex lower. This is pushing December lean hog trade nearly $2 per cwt as recent market support is being tested. Corn markets are lower in light early trade. Stock markets are higher, Dow Jones is 114 points higher while Nasdaq is up 32 points.

LIVE CATTLE:

Open: 10 to 50 cents lower. The general trend of lower market prices continues to be seen in live cattle futures also as moderate pressure is developing in all livestock trade. The inability for buyers to become more aggressive earlier in the week in live cattle trade compared to the rest of the complex has allowed for a market pullback to be less aggressive at this point. October futures are holding a 20 cent loss, with the potential for some additional stability moving into the market over the next couple of hours. Cash cattle markets are undeveloped although packers are expected to become more active through the day. Most cash cattle trade is still likely to be delayed until Thursday or Friday. Open interest Tuesday gained 2,094 positions (336,533). Spot month October contracts lost 2,761 positions (31,392) and December contracts added 1,712 positions (125,889). DTN projected slaughter for Wednesday is 119,000 head.

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FEEDER CATTLE:

Open: 20 to 80 cents lower. General market pressure is seen through the entire feeder cattle complex following losses in all livestock trade early in the session. There may be some additional underlying weakness seen through the complex as traders have tested long term support levels during early October. Although at this point the tone of the market remains firm, strong pressure of 60 to 80 cents per cwt in nearby contracts could add some volatility and uncertainty to trade direction through the remainder of October. Cash index for 10/1 is listed at $157.82, up 0.34. Open interest Tuesday added 486 positions (57,350).

LEAN HOGS:

Open: 10 cents to $2 lower. Initial pressure in lean hog futures is all over the place as traders step back into the complex. Front-month October contracts seem to be holding the most stable line with very narrow losses developing across the complex. December contracts on the other hand have posted the most aggressive losses, falling nearly $2 per cwt in the opening minutes of trade. The wide volatile swings seen over the last week is adding to the overall market uncertainty through the entire complex. Cash hog trade Wednesday is expected steady to weak. Most bids are steady. Open interest Tuesday fell 2,175 positions (230,220). Spot month October fell 1,504 positions (19,585) and December lost 3,507 positions (105,803). Cash lean index for 10/1 is $67.93 up 0.67. DTN projected slaughter for Wednesday is at 471,000 head.

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

(SK)

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Rick Kment