DTN Before The Bell-Livestock

GENERAL COMMENTS

Light to moderate pressure has developed through lean hog futures once again Tuesday morning as trade volume has remained extremely light. Light buying activity has moved back into the cattle complex with short covering the main focus of early Tuesday trade. Corn markets are trading lower in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 115 points higher while Nasdaq is up 49 points.

LIVE CATTLE:

Opening call: Steady to 50 cents higher. Early buyer support has allowed prices to rebound as short covering has been seen in all cattle futures. This is moving nearby cattle futures firmly higher early Tuesday morning although it is uncertain just how deep the buyer support will remain. The strong underlying pressure seen through the month of August and building fundamental pressure is allowing for some oversold market conditions where commercial buyers may be willing to actively stepping into the complex late in the month. The upcoming cattle on feed report will likely keep the market volatile through the end of the week though with increased supplies still the main focus of the complex. Cash cattle activity remains undeveloped as bids and asking prices are yet to be well established. It is expected that trade will be delayed until midweek or later, and quite possibly until around the release of the cattle on feed report. Open interest Monday added 384 positions (312,482). Spot August lost 554 positions (4,762) and October contracts lost 1,391 positions (153,573). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Opening call: Steady to $1 higher. Short covering has quickly developed early Tuesday morning as traders have moved back into the market with buyer interest in mind. This has allowed for September contracts to push prices $1 per cwt higher although there still remains market uncertainty through the entire complex. Cash lean index for 8/17 is $145.80, down 0.06. Open interest Monday fell 870 position (54,106).

LEAN HOGS:

Opening call: Steady to 50 cents lower. Follow-through pressure has slowly trickled into lean hog futures trade early Tuesday morning with traders focusing on the overall lack of support seen in the complex and traders moving into the complex looking for increased fundamental pressure through the week. Even though short term support continues to hold at this point in nearby contracts, the potential for increased pressure is limiting any sense of buyer activity over the near future. Cash bids are steady to $1.50 lower with most bids $1 lower. Open interest Monday liquidated 2,917 positions (260,085). Spot month October slipped 2,456 positions (115,037) and December fell 403 positions (59,182). Cash lean index for 8/17 is $83.19, down 0.51. DTN projected slaughter for Tuesday is 445,000 head. Saturday runs are expected at 132,000 head.

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

(SK)

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