DTN Before The Bell-Livestock

Firm Gains Quickly Sweep Through Livestock Complex Thursday Morning

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

Livestock markets have posted moderate to firm gains early Thursday morning with traders quickly advancing positions during the early minutes of trade. This initial support continues to bring buyers back to the table following the support seen midweek. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 50 points higher while Nasdaq is up 28 points.

LIVE CATTLE:

Opening call: Steady to 50 cents higher. Follow-through buyer activity is moving into the live cattle with early support pushing prices higher as traders have focused on additional gains following the firm moves higher in the feeder cattle complex. Even though pressure continues to be seen in cash cattle markets, the ability to bring stability to the live cattle futures market has been encouraging in the sense that traders could limit long term losses through the end of August. Trade volume is expected to remain sluggish through most of the session, although very little additional direction is seen. Cash cattle markets are expected to remain sluggish early Thursday morning following light trade which developed Wednesday. The trade seen in the North was $3 to $4 per cwt lower than last week's price levels. This created some additional market pressure across the complex. Uncertainty in the market created concern across the market as traders have moved in and out of futures trade in a varied fashion with uncertainty through the last couple of weeks. Active cash trade may not redevelop until sometime later today or even until even Friday, but is expected to be set in the lower trade range at this point. Open interest Wednesday liquidated 389 positions (316,654). Spot August lost 616 positions (145) and October contracts lost 1,812 positions (144,616). DTN projected slaughter for Thursday is 118,000 head.

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FEEDER CATTLE:

Opening call: Steady to 70 cents higher. Moderate buyer support continues to move higher in feeder cattle markets as traders move into the complex with additional support seen in all livestock markets. The overall shift higher in the complex is quickly bringing trade volume into the market into the opening minutes of the market although it is uncertain just how deep buyers pockets are at this point. Cash lean index for 8/29 is $143.34, up 0.15. Open interest added 492 position (53,692).

LEAN HOGS:

Opening call: Steady to 50 cents higher. Light buyer support is slowly developing across the lean hog futures trade as buyers have focused on the support seen midweek in the complex. This is helping to bounce off of technical support seen in the complex as traders are looking for additional longer term market direction in the expectation that increased activity will be able to develop over the near future. Even though weakness is still seen in cash and pork values through the end of the week, the ability to close October contracts above $62 per cwt at the end of the month could become a rally point for commercial traders early next week. Cash bids are steady to 50 cents to $1.50 lower with bids scattered through the range. Open interest Wednesdays liquidated 2,074 positions (247,320). Spot month October slipped 3,327 positions (100,611) and December added 1,053 positions (61,860). Cash lean index for 8/29 is $74.59, down 1.09. DTN projected slaughter for Thursday 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