DTN Before The Bell-Livestock

GENERAL COMMENTS

Cattle futures are mixed in limited activity with prices hovering in narrow but stable trading range. Hog futures are holding light to moderate gains with buyers stepping back into the market following aggressive losses early in the week. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 167 points higher with Nasdaq up 68 points.

LIVE CATTLE:

Open: Mixed. Live cattle futures are stuck in a narrow but mixed trading range with traders trying to adjust market positions following moderate to wide moves early in the week. Nearby contracts are holding limited losses of 15 to 30 cents per cwt, with traders looking for additional market activity and potential adjustments in cash and beef values. Outside markets are starting to play a larger role in the live cattle market through the end of the year as overall economy direction will have a longer term impact in the ability to move beef through the upcoming year. Cash cattle remain at a standstill with bids generally undefined at this point. Asking prices are still hard to pin down, but expected to be seen around $122 live and $190 and higher dressed. Even though bids are expected to become more evident through the session Wednesday, active trade is likely to be delayed until Friday, and potentially after the cattle on feed report is released. Open interest Tuesday gained 3,105 positions (348,845). Spot month December contracts lost 1,190 positions (6,313) and February contracts added 870 positions (134,974). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Given the wide ranging back and forth price shifts seen through the week, limited trade in feeder cattle futures early Wednesday morning is focusing on additional market stability. There is growing uncertainty as to just how much additional buyer activity may develop through the week, as traders continue to balance long term supplies with expected demand through most of 2019. Traders are starting to hone in on the upcoming cattle on feed report, where estimates are at 93% year ago levels. This could help to instill some additional support through the complex through the rest of the week. Cash index for 12/17 is listed at $145.55 down $0.65. Open interest Tuesday added 307 positions (49,528).

LEAN HOGS:

Open: 30 to 60 cents higher. Light buyer support is slowly but steadily working through nearby lean hog trade Wednesday morning following strong market losses that not only added technical pressure to the complex, but added some additional fundamental pressure due to the overall lack of support in pork cutout values at the end of the day Tuesday. At this point it is uncertain how much of the nearby buyer support is short covering, or renewed buyer support moving back into the market. The current market is slightly oversold, and given increased volume may hold early gains Wednesday morning. Cash hog trade is steady to $1.00 lower. Most bids are steady to 50 cents lower. Open interest fell 5,046 positions (206,122). February fell 114 positions (77,253) and April lost 425 positions (46,292). Cash lean index for 12/17 is $55.07 down 0.06. DTN projected slaughter for Wednesday is at 477,000 head. Saturday runs are expected near 353,000 head.

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

(BAS)

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