DTN Before The Bell-Livestock

Hogs Challenge Their Highs

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN photo by Nick Scalise)
GENERAL COMMENTS

December hogs are pushing higher again early Tuesday, challenging resistance at $60.00 while cattle and feeders are starting lower. Grains are a little lower and outside commodities are mixed.

LIVE CATTLE:

Open: 37 cents higher. December cattle started with a higher open that was quickly rejected and are now trading down 17 cents early. The Dow Jones futures is starting slightly higher and grains are mostly a little lower. Friday's higher cash prices were encouraging and boxed beef prices started steady to higher this week, but it as usual, it will take time for the next round of cash trades to develop. Cash cattle are expected to be steady to $2 higher early Tuesday. Monday's total open interest increased 6,133 to 342,812. October contracts dropped 301 to 757 and December increased 2,568 to 122,245. Dow Jones projected cattle slaughter for Tuesday at 119,000 head, up from 117,714 a year ago.

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FEEDER CATTLE:

Open: 25 cents higher. January feeder cattle also quickly rejected a higher open and are now down 97 cents at $148.85, possibly in for a challenge of this month's support at $148.00. December corn is down a penny so there is no obvious source pressuring prices lower, but if a break does occur, $144.00 would be the next candidate for support. So far, cattle and feeder prices continue have benefited from increased beef demand and a positive outlook for the economy, in spite of this year's trade concerns. A sideways trend however, has been the best they can do. The Feeder Cash index for 10/26 is listed at $153.56, down $1.81 from a week ago. Monday's total open interest decreased 2,077 to 49,821.

LEAN HOGS:

Open: 67 cents higher. December hogs are up 85 cents early Tuesday at $59.70, challenging resistance at $60.00. In spite of concerns of a higher slaughter pace in the fourth quarter, carcass prices continue to hold up fairly well and that appears to be helping hog prices find this unexpected support. The Lean Hog Index for 10/26 was estimated at $64.16 down $2.27 from a week ago. Cash hog trade is expected to be steady to $1 lower early Tuesday. Monday's total open interest increased 442 to 225,806. Open interest in the December contract dropped 816 to 95,626 and February contracts decreased 135 to 45,271. Dow Jones projected hog slaughter for Tuesday at 475,000 head, up from 463,285 a year ago.

Todd Hultman can be reached at Todd.Hultman@dtn.com

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Todd Hultman