DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures are mixed in a narrow range through most nearby contracts early Wednesday morning. A combination of follow-through selling and short covering is seen in the initial minutes of trade, potentially allowing additional volume to sweep through the complex later in the day. Corn markets are lower in light early trade. Stock markets are higher, Dow Jones is 198 points higher while Nasdaq is up 83 points.

LIVE CATTLE:

Open: Steady to 35 cents lower. Limited moves are seen through the live cattle complex with traders looking for additional market direction following choppy but weak market shifts through the first few days of November. Despite strong moves in beef values and expected cash market support, the potential to attract buyers in live cattle trade seems limited at best. Given the market weakness over the last two weeks where nearby contracts have fallen over $3 per cwt, prices are still well within the sideways trading range that has been established. This could allow markets to wander in a continued wide range without triggering any technical market moves. Cash cattle trade remains generally undeveloped following very limited packer interest early in the week. Packer activity is expected to improve through the day with asking prices still around $118 live and $185 and higher dressed. But active trade may not be seen until late in the week. Open interest Tuesday gained 405 positions (353,453). Spot month December contracts lost 4,746 positions (113,176) and December contracts added 3,802 positions (98,039). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. The direction of feeder cattle futures has been extremely limited over the past two trading sessions with mixed trade once again developing Wednesday morning within a narrow trading range. Nearby contracts are hovering from 20 cents lower to 27 cents higher with very limited interest moving back into the complex early in the session Wednesday. It is uncertain just how much buyer support will develop through the morning given the overall lack of follow-through buying activity that was able to be seen late-day Tuesday. This could continue to bring limited pressure into the complex as nearby contracts have moved below $150 per cwt and are having a hard time finding solid buyer support. Cash index for 11/02 is listed at $153.55, down 0.34. Open interest Tuesday gained 239 positions (49,484).

LEAN HOGS:

Open: Mixed. Light trade activity is seen in nearby lean hog trade at opening bell with prices hovering in a narrowly mixed trading range with most contracts contained from 10 cents lower to 10 cents higher. An attempt to cover short positions following the sharp losses Tuesday may help to push prices higher. But this is not expected to create any significant market support at this point. The limit losses in December contracts Tuesday allows for expanded trading limits through the entire Wednesday session, although at this point, it does not appear that any wide moves will develop in the near future. Cash hog trade Wednesday is expected steady to $1 lower. Most bids are $1 lower. Open interest fell 982 positions (220,802). Spot month December slipped 2,846 positions (76,969) and February added 1,848 positions (51,886). Cash lean index for 11/2 is $64.08 down 0.04. DTN projected slaughter for Wednesday is at 477,000 head. Saturday runs are expected at 250,000 head.

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

(BAS)

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