DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures remain under pressure with traders looking for additional market movement following the most recent losses in cattle trade. Hog futures continue to wander in a choppy market pattern with daily market shifts still developing. Corn markets are higher in light early trade. Stock markets are mixed, Dow Jones is 2 points higher while Nasdaq is down 15 points.

LIVE CATTLE:

Open: Steady to 20 cents lower. Narrow single-digit losses are slowly developing in several contracts with very sluggish market activity seen through the entire complex. This may add some additional uncertainty to the market as traders are currently teetering on the edge of potential further market pressure, while buyers are taking into account fundamental strength over the last couple of weeks and could reach to firming market support through the next couple of days. Active liquidation in December contracts midweek is pointing to the potential that traders are looking at moving more aggressively at early 2019 contract months and willing to pay the $3 to $4 per cwt premium at this point to focus on long-term direction of the market. This could add some volatility over the next couple of days. Cash cattle markets remain quiet early Thursday morning with bids expected to become more evident through the day. A few cattle were sold in the North at $180 dressed basis Wednesday, although this is not enough to establish a reliable trend, but it did get the ball rolling. Feeders are holding to asking prices of $118 live and $185 dressed, but it is expected that both sides will be more willing to make deals as the week continues. Open interest Wednesday tumbled 6,895 positions (346,162). Spot month December contracts lost 10,851 positions (102,851) and February contracts added 856 positions (98,791). DTN projected slaughter for Thursday is 118,000 head.

FEEDER CATTLE:

Open: Steady to 40 cents lower. Limited trade volume is seen through the complex with traders focusing on additional market weakness following triple digit losses in deferred contracts on Wednesday. This may add some additional market pressure with most nearby contracts holding losses of 30 to 40 cents per cwt even though trade activity is likely to remain sluggish through most of the morning. Traders are quickly focusing on outside market direction as well as the uncertainty of short-term beef demand through the end of the year. This could continue to erode buyer activity through the middle of November. Cash index for 11/06 is listed at $152.88, down 0.44. Open interest Wednesday gained 304 positions (49,779).

LEAN HOGS:

Open: 50 to 70 cents lower. Light to moderate pressure is seen through the lean hog complex with traders pulling back from the market support seen Wednesday. The daily back and forth swings seem to continue with markets still chopping around in the sideways trading range which was established over the last month. It is uncertain if markets will test support levels through early November, but the overall weakness through the week is pointing toward market erosion during the next several weeks. Cash hog trade Thursday is expected $1 lower. Open interest added 320 positions (221,096). Spot month December slipped 3,999 positions (72,976) and February added 1,689 positions (53,553). Cash lean index for 11/6 is $63.72 down 0.24. DTN projected slaughter for Thursday is at 475,000 head. Saturday runs are expected at 215,000 head.

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

(BAS)

Copyright 2018 DTN/The Progressive Farmer. All rights reserved.