DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures are mixed as cattle futures have turned lower once again Tuesday morning as traders focused on firm pressure in feeder cattle trade. The lack of support in nearby feeder cattle trade is creating widespread pressure. This is being offset by strong triple digit gains across the lean hog complex Tuesday morning. Corn markets are trading higher in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 101 points lower while Nasdaq is down 15 points.

LIVE CATTLE:

Opening call: 20 to 50 cents lower. Narrow trading ranges have been seen so far in live cattle markets Tuesday morning, but the firm pressure in feeder cattle has created uncertainty as traders return from the holiday weekend. The lack of confidence surrounding meat clearance over the weekend and ability to continue aggressive beef demand through the month of September is causing some concern with traders to step back into the market even at the current price levels. The focus on upcoming supply levels through the end of the year and early 2018 may continue to limit the upside potential of any buying activity during the early part of the week. Cash cattle activity remains undeveloped early Tuesday morning as both sides return from the holiday weekend with very little direction following the light trade last week. Show list distribution and inventory taking is expected to be the main order of business even though packers are expected to be short bought going into the week. Trade may not develop until the middle of the week even though packers may not have a lot of cattle in reserve to draw on at this point. Open interest Friday added 1,179 positions (315,512). Spot October lost 2,885 positions (137,377) and December contracts added 2,329 positions (84,371). DTN projected slaughter for Tuesday is 118,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1 lower. Moderate to firm pressure is quickly developing through the feeder cattle market as traders are focusing on the overall lack of support redeveloping in the cattle trade following the holiday weekend. With opening losses near $1 per cwt, the overall concern that a strong downturn may once again be seen in early September and set the tone for the live cattle market also. Trade volume in feeder cattle is expected to remain light through much of the morning, but the early weakness is likely to keep the tone of the market under pressure so most buyers will likely stay on the sidelines until they see a turn in market conditions. Cash lean index for 8/31 is $143.08, up 0.17. Open interest Friday fell position (53,400).

LEAN HOGS:

Opening call: $1 to $1.50 higher. Sharp early-week gains have quickly developed through the lean hog futures trade with buyer's aggressively moving back into the nearby contracts. This support continues to focus on the ability to build off of the support seen through the end of last week as commercial traders are moving back into the market. Fundamental uncertainty still remains in the market which is creating the expectation of weaker cash market activity through the next few days, but if futures trade continues to move higher, this will quickly change through the month of September. Cash bids 50 cents to $1.50 lower with bids scattered through the range. Open interest Friday liquidated 1,798 positions (244,635). Spot month October slipped 2,621 positions (94,621) and December added 730 positions (65,797). Cash lean index for 8/31 is $72.39, down 1.13. DTN projected slaughter for Tuesday is 448,000 head.

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

(SK)

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