DTN Before The Bell-Livestock

GENERAL COMMENTS

Sluggish trade has been seen in livestock futures early Wednesday morning. This is keeping markets quiet for the most part, which is keeping most buyers on the sidelines. Activity remains focused on the direction of cash market moves through the day as well as outside market shifts, which could make a significant market impact through the end of the week. Corn markets are trading lower in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 61 points higher while Nasdaq is up 15 points.

LIVE CATTLE:

Opening call: Mixed. Trade across the live cattle futures complex has remained mixed in a narrow range following the moderate pressure early in the week. The potential to bring some stability to beef values in early September is creating some underlying support in nearby live cattle contracts, although the concern that long term supplies cattle available to the market still will keep buyers cautious over the next couple of months. This could keep prices moving within a choppy but sideways pattern over the near term, but trading ranges have remained narrow in the opening minutes fo trade. Cash cattle markets remain quiet early Wednesday morning with bids and asking prices still unavailable. The earliest activity will likely be the development of trade on the Fed Cattle Exchange Auction through the morning Wednesday, which may help to set the tone, although lighter volume is expected once again. Overall feedlot trade is expected to be pushed off until the last half of the week, and likely sometime in Thursday or Friday based on the delayed nature of the holiday weekend. It is expected that asking prices will start out around $107 live and $168 and higher dressed. But bids may be sluggish to develop depending on the mood of futures trade through the session. Open interest Tuesday added 779 positions (315,389). Spot October lost 3,430 positions (133,303) and December contracts added 1,941 positions (86,100). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1 higher. Early support has moved into cattle trade as short covering has developed across feeder cattle futures with buyers stepping into the complex in the expectation that additional support may continue to develop through the week. The buyer interest may slow due to overall light volume seen through the morning, which could limit any follow through interest later in the day. Cash lean index for 9/4 is $145.27, up 1.00. Open interest Tuesday fell 1,782 position (50,406).

LEAN HOGS:

Opening call: Mixed. Narrow trading ranges are seen early Wednesday morning with lean hog futures slowly adjusting to the recent market support which developed early in the week. The overall tone of the market remains strong, but traders seem cautious to become as aggressive as they were Tuesday with prices 10 to 40 cents per cwt higher in the opening minutes of trade. Firm commercial support continues to be seen across the complex, which could lead to underlying support through the rest of the complex. Cash bids 50 cents to $1.00 lower with bids scattered through the range. Open interest Tuesday added 2,328 positions (246,912). Spot month October slipped 1,370 positions (92,891) and December added 2,364 positions (68,144). Cash lean index for 9/11 is $71.36, down 1.03. DTN projected slaughter for Wednesday is 450,000 head. Expectations for Saturday's procurement runs are hitting 375,000 head.

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

(SK)

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