DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed trade is developing early Monday with traders focusing on additional direction in outside trade. This is keeping most markets shifting in a moderate pattern with no sense of urgent market direction. Lean hog and live cattle trade is mixed from 40 cents lower to 50 cents higher in early activity while firmness in feeder cattle markets could help to bring some uniformity to markets later Monday. Corn markets are lower in light early trade. Stock markets are lower. Dow Jones is 170 points lower with Nasdaq down 8 points.

LIVE CATTLE:

Open: Mixed. Narrow losses have developed in nearby live cattle trade following general pressure in outside markets early Monday morning. The focus through the entire complex continues to be driven by the potential to sustain recent cash market support and spark additional buying in beef values. Even though overall movement of beef is expected to remain firm through the end of the year, more focus continues to be placed on other markets due to cattle trade still stuck in the sideways trading range seen over the last couple of months. Cash cattle activity is undeveloped following limited light trade seen Friday afternoon last week. With prices seen $1 to $3 per cwt higher from the previous week, the focus on securing even more cattle is likely to be on the minds of packers. Inventory taking and show list distribution is expected to be the main focus through the entire day Monday. Open interest Friday added 178 positions (336,984). Spot month December contracts lost 1,496 positions (18,479) and February contracts slipped 1,105 positions (137,235). DTN projected slaughter for Monday is 119,000 head.

FEEDER CATTLE:

Open: 20 to 40 cents higher. Firm gains have quickly developed through the feeder cattle futures trade early Monday. This comes after a couple of days of lackluster activity that has created some market stability, but has been unable to spark any sense of trade support through the entire feeder cattle trade. The potential that this initial buyer support could spark some additional buyer activity is helping to draw traders back to the complex. Traders are also focusing on the pullback in corn and soybean meal trade early Monday, which helps to reduce overall production costs. Cash index for 12/05 is listed at $145.53 down $0.85. Open interest Friday added 72 positions (49,384).

LEAN HOGS:

Open: Mixed. Initial early trade is mixed in a moderate to wide range with prices scattered through the entire range. There continues to be a lot of focus on outside market direction through the morning, although a sense of calmness seems to be seen following the weekend break. This may allow prices to gravitate more toward fundamental direction through the next couple of weeks as traders still focus on strong production levels while long term demand remains in question. Cash hog trade Monday is steady to $1.00 lower. Most bids are steady. Open interest added 83 positions (211,911). Spot month December fell 2,117 positions (16,208) and February gained 1,274 positions (79,061). Cash lean index for 12/05 is $56.19 up 0.21. DTN projected slaughter for Monday is at 477,000 head.

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

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