DTN Before The Bell-Livestock

Cattle Futures Set Contract Highs

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

Cattle futures have led the market higher as nearby live cattle futures have established contract highs during morning trade, allowing additional buyer support to flood the complex. Lean hog futures remain mixed to mostly higher as spillover support from the cattle market is helping to instill additional market momentum in nearby lean hog trade. Corn markets are higher in light early trade. Stock markets are lower. Dow Jones is 325 points lower with Nasdaq down 121 points.

LIVE CATTLE:

Open: 50 cents to $1.30 higher. Nearby live cattle futures have set contract highs early Thursday morning with lightly traded December contracts expanding the stretch of contract gains over previous support, while actively traded and soon to be spot-month February futures broke through October highs of $123.73 per cwt during initial morning trade. This has sparked underlying market support through the entire live cattle complex, helping to instill additional buyer activity to the market. With February futures leading the complex with prices at $124.05 and a $1.32 per cwt rally, additional buyer interest is likely to develop through the morning. Cash cattle interest remains sluggish with bids still undeveloped early Thursday morning. A few asking prices have surfaced around $122 per cwt live and $195 dressed. Even though packer interest is expected to improve through the day, it is very likely that active trade may not develop until sometime Friday. Open interest Wednesday gained 2,892 positions (356,309). Spot-month December contracts lost 645 positions (1,802) and February contracts gained 396 positions (132,688). DTN projected slaughter for Thursday is 120,000 head.

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FEEDER CATTLE:

Open: 50 cent to $1.20 higher. Strong underlying support is seen through the cattle complex Thursday morning. This is helping to bring triple-digit gains to nearby feeder cattle trade. The focus on moderate gains in grain trade has been offset by outside market pressure. However, traders continue to dwell on the potential for strong cash and beef market support, which is likely to help sustain buyer activity through the end of the year. Cash index for 12/25 is listed at $147.71 up $0.05. Open interest Wednesday fell 53 positions (48,552).

LEAN HOGS:

Open: 10 to 80 cents higher. Firm spillover buyer support is seen in lean hog futures trade even though trade volume is likely to remain sluggish through most of the day. Front month February futures are leading the complex higher after bouncing off short-term lows of $60.30 per cwt surrounding the Christmas holiday. The ability to add to recent market support and push prices away from $60 per cwt may help to spark renewed buyer interest during early January. Trade is expected to remain sluggish through the remainder of the year, but the ability to continue to slowly bring buyers back to the table will prove significant in long-term market support. Cash hog trade is 50 cent higher to $1.00 lower. Most bids are steady. Open interest added 1,439 positions (203,345). February fell 226 positions (75,969) and April gained 1,177 positions (51,318). Cash lean index for 12/21 is $53.32 down 0.55. DTN projected slaughter for Thursday is 477,000 head. Saturday runs are expected at 420,000 head.

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

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Rick Kment