DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong pressure has quickly swept through cattle markets with aggressive triple-digit losses moving into feeder cattle trade. This has also led to steady pressure in all live cattle futures with traders unwilling to hold current positions given the weakness in the complex. Lean hog futures remain slightly higher as short covering is developing after the aggressive previous market pressure over the last couple of weeks. Corn markets are trading lower in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 22 points higher while Nasdaq is up 5 points.

LIVE CATTLE:

Opening call: 50 cents to $1 lower. Early pressure in feeder cattle markets have led to additional pressure in live cattle markets Thursday morning. The combined weakness in cash cattle trade Wednesday and softness in beef values has quickly limited any support seen early in the week in live cattle futures as traders focus on market liquidation once again. October live cattle futures are nearing triple digit losses with traders uncertain about the ability to draw additional interest back into the complex following the cattle on feed report next week. Cash cattle activity remains quiet early Thursday morning following lower light trade seen midweek that developed in several areas through the day. Prices fell $2 to $4 per cwt from last week's levels, which may set the tone of the week, although there is expected to be additional activity still needed to be done for the week in all areas. It may be either late Thursday, or potentially even after the release of the cattle on feed report before final cattle trade develops for the week as traders try to focus on overall market direction and potential supply availability given the uncertainty seen in the market. Open interest Wednesday added 2,137 positions (315,698). Spot August lost 701 positions (3,448) and October contracts lost 937 positions (151,931). DTN projected slaughter for Thursday is 118,000 head.

FEEDER CATTLE:

Opening call: $1 to $2 Lower. Strong losses have returned to the feeder cattle market once again with traders quickly focusing on losses in September contracts. This has pushed all nearby contracts back to $140 per cwt during the opening minutes of trade. If prices move below this level through the morning, expect follow through liquidation to develop through the rest of the complex. Cash lean index for 8/22 is $143.38, down 0.05. Open interest Wednesday fell 332 position (54,297).

LEAN HOGS:

Opening call: Steady to 50 cents higher. Light support has trickled into the lean hog complex following the aggressive market pressure which has developed over the last couple of weeks. The sharp pressure seen in hog markets which focused on combined fundamental and technical pressure has allowed a sense of short covering activity at the end of the week. It is uncertain just how much follow through buyer support will develop through the rest of the week and if buyers can move back into the complex through the morning. Cash bids are 50 cents to $1.50 lower with most bids $1 lower. Open interest Wednesday liquidated 1,392 positions (252,781). Spot month October slipped 1,224 positions (110,038) and December added 109 positions (58,437). Cash lean index for 8/22 is $80.49, down 1.04. DTN projected slaughter for Thursday is 445,000 head. Saturday runs are expected at 142,000 head.

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

(SK)

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