DTN Before The Bell-Livestock

GENERAL COMMENTS

Cattle futures continue to move lower early Wednesday morning as follow through pressure has developed even though losses have eased from the triple-digit pressure seen Tuesday. Buyer support is moving into the hog markets as oversold markets have allowed light interest to trickle into the market even though fundamental pressure remains. Corn markets are trading lower in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 11 points lower while Nasdaq is up 10 points.

LIVE CATTLE:

Opening call: Steady to 50 cents lower. Light follow-through pressure is developing early Wednesday morning with strong triple-digit losses seen Tuesday. There continues to be some pressure in all markets as commercial sellers are focusing developing support through the complex. Cash cattle activity remains sluggish Wednesday morning with just a few bids developing early. There continues to be some increased activity developing activity as Fed Cattle Exchange Auction will trade later in the morning. Feed lot trade will take place later in the week. Open interest Tuesday liquidated 302 positions (316,536). Spot August lost 523 positions (761) and October contracts lost 1,716 positions (146,478). DTN projected slaughter for Wednesday is 117,000 head.

FEEDER CATTLE:

Opening call: Steady to 50 cents lower. Strong seller activity has continued to develop in the cattle market as traders are focused on follow through pressure in live and feeder cattle markets. This will likely bring additional pressure to the entire market with follow-through uncertainty through the end of the week. Even though light support is seen in front-month August futures, the rest of the complex remains under extreme pressure as traders are focused on live cattle market moves. Cash lean index for 8/24 is $143.24, down 0.18. Open interest Tuesday fell 325 position (53,222).

LEAN HOGS:

Opening call: 50 cents to $1 higher. Firm buyer support has returned to nearby lean hog futures contracts following aggressive selling pressure over the last two weeks which has created long term pressure in the hog complex. Overall trade volume remains light early Wednesday morning, as fundamental support remains light due to cash markets remaining weak through the end of August. But the market remains extremely oversold at this point, creating some potential to move the market higher and causing commercial buyers to move actively back into the market. Open interest Tuesday added 42 positions (249,451). Spot-month October slipped 1,572 positions (103,949) and December added 949 positions (60,814). Cash lean index for 8/24 is $78.23, down 1.17. DTN projected slaughter for Wednesday is 448,000 head. Saturday runs are expected at 108,000 head.

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

(SK)

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