DTN Before The Bell-Livestock

Moderate Pressure Slowly Steps into Cattle Trade Midweek

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

Livestock futures remain mixed early Wednesday morning as position-squaring activity is the main order of business through cattle trade due to the extremely light trade volume. Narrow gains have sluggishly meandered into the lean hog complex as follow through support is trying to become well established following firm market support Tuesday. Corn markets are trading lower in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 62 points higher while Nasdaq is up 9 points.

LIVE CATTLE:

Opening call: 20 to 50 cents lower. Narrow losses have slowly trickled into the live cattle complex early Wednesday morning as traders are focusing on squaring positions following the strong triple digit rally seen Tuesday. The overall live cattle futures complex continues to be seen as oversold, which may add to the renewed buyer support over the last couple of sessions. But sluggish market activity is likely to remain over the first hour of trade, potentially keeping markets under pressure. Cash cattle activity remains quiet early Wednesday morning with bids unavailable at this point. Asking prices remain at $115 to $117 in the South and $180 and higher in the North. It is possible that after the Fed Cattle Exchange Auction trades later Wednesday morning that more feedlot interest will be shown. Open interest Tuesday gained 988 positions (311,106). Spot August lost 1,103 positions (8,733) and October contracts fell 301 positions (157,184). DTN projected slaughter for Wednesday is 119,000 head.

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FEEDER CATTLE:

Opening call: 50 to 90 cents Lower. Light trade volume is seen early Wednesday morning as traders cover positions following the aggressive market surge seen through the last half of the Tuesday trading session. Buyer support continues to be well fortified midweek, but this is creating the opportunity for many traders to square positions before increased volume may bring in additional buyer support. Cash lean index for 8/14 is $145.32, down 0.58. Open interest Tuesday fell 674 position (56,671).

LEAN HOGS:

Opening call: 20 to 40 cents Higher. Moderate follow-through buyer support has quickly stepped back into the complex early Wednesday morning. This is allowing for additional market direction to develop across the lean hog complex as commercial support continues to firm. Front month October contracts continue to lead the market higher with a 42 cent per cwt rally during the first few minutes of trade with the focus on market stability and follow through gains possible through the rest of the morning. Cash bids are steady to $1 lower with most bids 50 cents to $1 lower. Open interest Tuesday added 6,945 positions (276,136). Spot month October added 3,414 positions (124,663) and December added 984 positions (59,296). Cash lean index for 8/14 is $84.38, down 0.40. DTN projected slaughter for Wednesday is 445,000 head. Saturday runs are expected to be near 125,000 head.

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

(SK)

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Rick Kment