DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm pressure is seen through cattle trade as active buyer activity is stepping into the complex. This is helping to draw long term market support back into the complex although the scope of trade interest remains limited. There is still uncertainty as to how much support there will be over the next couple of weeks given beef market shifts through the holiday weekend. Hog markets remain under pressure early in the week on fundamental weakness. Corn markets are trading lower in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 24 points lower while Nasdaq is up 3 points.

LIVE CATTLE:

Opening call: 50 cents to $1 higher. Firm support is actively stepping into the live cattle futures complex early Monday morning with traders focusing on the lighter than expected placement numbers in the cattle on feed report seen Friday. This overall support has helped to push firm buyer activity into all live cattle trade with firm support seen in October through April contracts. Additional firm buyer activity may help to draw additional strong longer-term activity through the session with further pressure developing in grain markets. Cash cattle markets remain undeveloped with show list distribution the main order of the morning. Bids and asking prices are undeveloped and likely to not be seen until later in the week. With the holiday weekend quickly approaching, trade will likely try to develop earlier than later, with very little activity expected next week. Open interest Friday added 2,013 positions (318,750). Spot August lost 503 positions (1,909) and October contracts lost 902 positions (150,581). DTN projected slaughter for Monday is 118,000 head.

FEEDER CATTLE:

Opening call: $1 to $2 higher. Swift market support is quickly moving back into the cattle market following the cattle on feed report last Friday when total cattle placements did not come in as high as expected on August 1st. This has allowed aggressive triple-digit buyer support to quickly sweep through most buyer activity through most contract months. There continues to be some increased buyer interest through all trade levels with buyers looking for support in nearby and deferred contracts. Cash lean index for 8/24 is $143.24, down 0.18. Open interest Friday fell 17 position (53,731).

LEAN HOGS:

Opening call: 50 to 75 cents lower. Light to moderate losses have slowly developed through the lean hog complex early Monday morning as follow through pressure has moved through the complex with traders stepping into the market unable to hold previous support levels late last week. The concern that further fundamental and technical pressure will develop through the end of the month will allow for commercial erosion is bringing added weakness to the market through the rest of the complex. Cash bids are 50 cent to $2 lower with most bids $1 lower. Open interest Friday liquidated 1,521 positions (250,420). Spot month October slipped 1,652 positions (106,831) and December fell 51 positions (59,189). Cash lean index for 8/24 is $78.23, down 1.17. DTN projected slaughter for Monday is 445,000 head. Saturday runs are expected at 144,000 head.

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

(SK)

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