DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate to strong losses have developed in all livestock trade early Thursday morning. This is sparking some increased pressure based on outside market shifts. Lean hog futures are holding $2 per cwt losses on uncertainty in global trade activity. The cattle market continues to pull back from midweek support as additional trade volume is seen Thursday. Corn markets are lower in light early trade. Stock markets are lower. Dow Jones is 438 points lower with Nasdaq down 127 points.

LIVE CATTLE:

Open: 50 cents to $1 lower. Firm pressure has quickly moved through the entire livestock complex with live cattle futures also being affected. Most of the focus in live cattle trade has to do with spill over pressure from most other commodity markets. Given the strong market support over the last couple of days, the current market losses have little technical impact on the exchange, but the uniform losses through the complex speaks more to the fact that there is little interest for any buyers to step in front of this market any time soon. Traders are generally focused on fundamental direction and the late-week development of cash cattle trade, but outside market shifts continue to be the main driving force of live cattle trade through the morning Thursday. Cash cattle interest remains sluggish, although there are a few scattered bids being redeveloped in the same range as seen Wednesday. Current bids of $112 to $114 per cwt live is still a long way from current asking prices of $120 live and $190 dressed. The standoff is expected to continue through most of the day although packer interest is expected to improve. Open interest Wednesday added 1,563 positions (336,482). Spot month December contracts lost 1,558 positions (22,817) and February contracts gained 480 positions (137,609). DTN projected slaughter for Thursday is 119,000 head.

FEEDER CATTLE:

Open: $1 lower. Sharp early losses have flooded into the feeder cattle futures as traders seem to be heavily influenced by aggressive market losses in most commodity markets. The concern that traders have no additional information as to what any future and short term trade activity with China will look like is causing significant market volatility as traders move back into the market. This could add some even more uncertainty and price shifts to the complex through the end of the week. Cash index for 12/04 is listed at $146.39 down $0.33. Open interest Wednesday fell 85 positions (49,807).

LEAN HOGS:

Open: $1 to $2 lower. Sharp morning losses have flooded into lean hog futures following widespread pressure in most commodity markets Thursday. The limited overall direction and lackluster interest seen on Wednesday has allowed for increased market bearishness to regroup as aggressive pressure has quickly swept through the hog complex. February futures have led the market lower with a $2 per cwt loss as traders continue to focus on the uncertainty of the impact and scope of trade activity with China will entail. With still no details on what will be involved and what timeline will be seen, any early week optimism has been thwarted. The volatility in the market has created a strong rally in packer margin through the week, with estimated margins improving over $11 per head based on the recent shifts in cash values and overall pork values. This volatility in the entire market will continue to swiftly shift margins both at the packer and producer level. Cash hog trade Thursday is steady to $1.50 lower. Most bids are $1 lower. Open interest added 594 positions (215,469). Spot month December fell 1,855 positions (21,250) and February added 699 positions (78,244). Cash lean index for 12/04 is $56.40 up 0.02. DTN projected slaughter for Thursday is at 477,000 head. Saturday runs are expected at 185,000 head.

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

(BAS)

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