DTN Before The Bell-Livestock

Moderate Pressure Developed Tuesday in Early Trade

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

Livestock futures remain under pressure Tuesday morning as trades in the cattle complex have pulled back from early week support. The lack of trader activity in the complex seems to be limiting overall activity in the market and will be able to allow for prices to push lower over the near future. Corn markets are trading lower in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 61 points lower while Nasdaq is down 30 points.

LIVE CATTLE:

Opening call: Steady to 50 cents lower. Live cattle futures have traded slightly lower early Tuesday as the focus on strong market support Monday has allowed for traders to pull back from early support. There is expected to be some additional choppy market activity expected through the morning as very little cash development is seen over the next few days and traders try to look for fundamental direction. But a sense of stability over the fall is being sought with traders looking for some potential as grain markets still remain bearish although overall demand for meat product remains firm. Cash cattle activity remains quiet early Tuesday morning with very little interest shown by either side. There is not expected to be trade seen until sometime Wednesday or later. It is expected that asking prices will start out at $108 or higher on a live basis and $173 dressed basis and higher. Bids are undeveloped, at this point and may venture into the market later in the day, but may not be well developed until midweek. Open interest Monday liquidated 1,351 positions (317,103). Spot August lost 622 positions (1,287) and October contracts lost 2,254 positions (148,247). DTN projected slaughter for Tuesday is 118,000 head.

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FEEDER CATTLE:

Opening call: Mixed. Light follow-through buyer support is slowly stepping into the feeder cattle futures complex as traders are focusing on the aggressive gains seen Monday. But there may be some uncertainty seen across the market as traders are concerned about the ability to continue the recent gains given the aggressiveness of early week support. The volatility in the market could lead to price swings through the week and this has led to wide market movement over the last couple weeks in feeder cattle trade. Cash lean index for 8/24 is $143.24, down 0.18. Open interest Monday fell 144 position (53,572).

LEAN HOGS:

Opening call: 50 to 75 cents lower. Pressure developed early Tuesday morning following additional morning softness through the cash hog complex with additional concerns in trade limiting buyer activity in the complex. This is creating additional buyer support through the market as traders are looking for trade support through the overall market activity during the end of August and will move through the beginning of fall. Trade volume is expected to slow through most of the morning, although there may be movement through midday based on trade volume in pork values Tuesday. Cash bids are 50 cent to $2 lower with most bids $1 lower. Open interest Monday liquidated 934 positions (249,447). Spot month October slipped 1,289 positions (105,521) and December added 682 positions (59,868). Cash lean index for 8/24 is $78.23, down 1.17. DTN projected slaughter for Tuesday is 447,000 head. Saturday runs are expected at 108,000 head.

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

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Rick Kment