DTN Before The Bell-Livestock

GENERAL COMMENTS

Lean hog futures continue to lead the market lower early Monday morning as traders seem to be focusing on follow-through market shifts, which started to develop late last week. The moderate pressure in nearby lean hog futures may add even more weakness through the morning with the focus on cash hog values. Live cattle futures are stuck in a narrow range after traders returned from the weekend break. Outside market moves may have a greater impact in overall market activity. Corn markets are trading lower in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 10 points lower while Nasdaq is up 8 points.

LIVE CATTLE:

Opening call: Steady to 25 cents lower. Trade is in a narrow range in live cattle futures early Monday morning. This overall lack of support in the complex is limiting buyer support once again, although the focus on upcoming holiday beef demand seems to be keeping most sellers out of the market at this point. Sluggish market activity is expected through most of the session. Although traders are focusing on upcoming cash activity, many traders are willing to tread water for the time being. Cash cattle activity will remain quiet through early week, following the downward market shift that developed last week. Bids and asking prices are likely to remain undeveloped through most of the day, focusing on showlist distribution and inventory taking. Open interest Friday added 2,495 positions (312,261). Spot August lost 770 positions (5,316) and October contracts lost 596 positions (155,033). DTN projected slaughter for Monday is 113,000 head.

FEEDER CATTLE:

Opening call: Mixed. Narrow trading ranges have developed early Monday morning with traders slowly pulling back from previous prices in nearby contracts while deferred futures are showing narrow gains of 5 to 10 cents per cwt. The continued concern of growing cattle supplies has allowed August through October contracts to erode during morning trade once again. Even tough August futures are fighting to hang onto prices above $140 per cwt, the rest of the nearby contracts have slipped below that level, potentially bringing about additional liquidation through the week. Cash lean index for Friday was $145.80, down 0.06. Open interest Friday added 108 positions (55,001).

LEAN HOGS:

Opening call: Steady to 50 cents lower. Light trade is slowly developing early Monday morning with nearby contracts allowing follow-through pressure in nearby contracts late last week. The overall continued erosion in lean hog futures has added even more pressure to the complex with nearby contracts holding losses near 50 cents per. Trade in deferred months remains generally quiet, but prices are steady to 15 cents per cwt lower as more focus will be placed on outside market shifts and the direction of cash trade through the week. Cash bids are steady to $2 lower with most bids steady to $1 lower. Open interest Friday liquidated 1,938 positions (263,078). Spot month October slipped 2,510 positions (117,506) and December added 23 positions (59,593). Cash lean index for 8/17 is $83.19, down 0.51. DTN projected slaughter for Monday is 425,000 head.

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

(SK)

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