DTN Before The Bell-Livestock

Cattle Futures Rally Monday

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

Strong market gains have developed in cattle futures following the cattle on feed report late last week. Cattle placements and total cattle on feed came in under market expectations, which is adding buyer support to the complex. Corn markets are higher in light early trade. Stock markets are lower, Dow Jones is 66 points lower while Nasdaq is down 12 points.

LIVE CATTLE:

Open: 50 cents to $1.30 higher. Strong early morning buyer support has flooded through the complex with all but lightly traded October contracts holding triple-digit gains. The support is focused on lighter than expected cattle in feedlots compared to last year. Even though cattle on feed levels were under pre report expectations and slightly under the market range, overall cattle in feedlots is still the largest in September since the data set started. This will likely limit strong follow through buying as traders realize that supplies are far from tight, and this is not expected to change over the near future. Cash cattle interest is moving back into early week routines with bids and asking prices expected to remain undeveloped over the next couple of days. The focus Monday will be on show list distribution and inventory taking across all areas of cattle country. Open interest Friday gained 607 positions (329,735). Spot month October contracts lost 1,365 positions (5,353) and December contracts added 327 positions (122,400). DTN projected slaughter for Monday is 118,000 head.

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FEEDER CATTLE:

Open: $1 to $2 higher. Strong early morning buying has flooded into the feeder cattle futures as traders react to the lower than expected cattle placement numbers in September. This has sparked prices at $1.50 and higher in most nearby contracts. This may be more of a reaction to previous market pressure sparked by the report, rather than a major shift in overall direction as overall cattle numbers were expected to shift in this direction through the month. Cash index for 10/18 is listed at $155.36, down 0.14. Open interest Friday fell 1,512 positions (54,130).

LEAN HOGS:

Open: Mixed. Lean hog trade is mixed in a narrow trading range early Monday morning with limited activity seen through the entire complex. Most of the focus through the livestock market has temporarily shifted to the cattle market which is posing strong early gains focusing on cattle on feed report numbers. This may allow the hog market to gain some needed stability, although the overall tone of the market remains weak. Cash hog trade Monday is expected steady to $1 lower. Bids are scattered through the range. Open interest fell 332 positions (222,822). Spot month December slipped 1,286 positions (100,926) and February added 573 positions (43,430). Cash lean index for 10/18 is $67.22 down 0.54. DTN projected slaughter for Monday is at 475,000 head.

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

(SK)

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Rick Kment