DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures have returned from the Christmas break with slightly more joyous spirits as light to moderate gains are holding in most contracts. The focus on firming beef and pork values through the end of the year is helping to sustain gains in live cattle and lean hog futures Wednesday morning. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 35 points higher with Nasdaq up 68 points.

LIVE CATTLE:

Open: Mixed. Live cattle futures are mixed to mostly higher with nearby contracts holding 50 to 80 cent gains through the initial minutes of trade. The overall lack of pressure in the complex continues to focus on firming beef values and the potential for additional cash market support through the end of the year. So far, the cattle complex has been a shelter from the aggressive outside market pressure seen over the past couple of weeks, allowing some traders some support when most other markets look extremely bearish. But the limited trade activity and volume in cattle markets and livestock trade in general seems to be limiting the noncommercial interest at this point. Cash cattle activity remains quiet early Wednesday mornings with the holiday early in the week, packers and feeders will need to get additional work done over the next three days. Although there still seems to be very little incentive for packers to become aggressive at this point, most bids may be delayed until sometime Thursday. This could delay trade until late Friday. Open interest Monday gained 2,805 positions (353,962). Spot month December contracts lost 538 positions (2,445) and February contracts fell 287 positions (132,636). DTN projected slaughter for Wednesday is 120,000 head.

FEEDER CATTLE:

Open: Steady to 60 cents higher. Firm market buying is moving into the cattle trade Wednesday morning following limited support early in the week. Traders are focusing on a combination of outside market shifts as more traders move back into the complex following the Christmas holiday break. But due to the New Year's holiday next week, overall trade during this week is still expected to remain sluggish, allowing traders to adjust market positions ahead of the year end. Cash index for 12/20 is listed at $145.89 up $0.15. Open interest Monday fell 104 positions (48,605).

LEAN HOGS:

Open: 50 to 80 cents higher. Moderate buyer support is slowly returning to the lean hog complex following the holiday break. The back and forth market shifts over the past week has allowed firmness to develop in nearby contracts, with very limited activity seen in late summer and fall 2019 contract months. The focus through the week will be placed on the government shutdown as well as outside market direction as limited activity is expected to be seen over the next few days as end-of-year positioning is being done. There will be more focus on the ability to sustain pork values through the end of the year, helping to keep nearby contracts hovering in the current market range. Cash hog trade is steady to $1.00 lower. Most bids are steady to 50 cents lower. Open interest added 1,587 positions (201,959). February added 75 positions (76,214) and April gained 1,524 positions (50,146). Cash lean index for 12/16 is $54.65 down 0.35. DTN projected slaughter for Wednesday is 477,000 head. Early Saturday runs are expected at 425,000 head.

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

(BAS)

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