DTN Before The Bell-Livestock

Light Buying in Cattle Trade Seen

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Mixed trade is seen Tuesday morning with the focus on firming cattle futures with increased overall support moving into the live cattle and feeder cattle trade. Hog markets are under light to moderate pressure with spillover selling left over from Mondays turn lower. Corn markets are mixed in light early trade. Stock markets are higher. Dow Jones is 295 points higher with Nasdaq up 94 points.

LIVE CATTLE:

Open: Mixed. Limited activity is seen in live cattle trade with most contracts mixed in a single-digit range. The focus on grain markets and the upcoming USDA reports is helping to spark some additional underlying activity through the entire complex. This may add some increased overall support through nearby trade although volume is expected to remain sluggish. Cash cattle markets are still quiet with very limited activity expected until later in the week. Bids and asking prices are undeveloped at this point. Open interest Monday added 3,265 positions (337,774). Spot month December contracts lost 3,284 positions (13,104) and February contracts gained 427 positions (137,389). DTN projected slaughter for Tuesday is 119,000 head.

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FEEDER CATTLE:

Open: 50 to 80 cents higher. Follow-through buyer support is slowly but steadily moving into feeder cattle trade. This is helping to spark some additional longer-term market support that has pushed front-month January futures near $146 per cwt. This may help to solidify buying activity in all cattle trade with the focus on firming beef demand through the next couple of weeks. Cash index for 12/07 is listed at $144.00 down $1.07. Open interest Monday added 144 positions (49,490).

LEAN HOGS:

Open: 10 to 50 cents lower. Early pressure has redeveloped through the entire lean hog market, although losses have been subdued through morning trade. This may add some additional pressure to the entire complex through the day with February leading the complex lower with a 62-cent-per-cwt loss. This may add even more weakness through the entire market, through the rest of the week. Traders continue to focus on outside markets with any hint of trade direction with China likely to spark some additional volatility through the complex. Cash hog trade steady is steady to $1.00 lower. Most bids are 50 cents to $1 lower. Open interest fell 1,771 positions (210,089). Spot month December fell 1,268 positions (14,921) and February slipped 876 positions (78,184). Cash lean index for 12/07 is $56.12 up 0.16. DTN projected slaughter for Tuesday is at 477,000 head. Saturday runs are expected at 223,000 head.

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

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Rick Kment