DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate to strong gains are starting to develop across the live cattle futures and feeder cattle market. This is likely to be accelerated through the rest of the complex, which could help to spark some increased support through the end of the week. Lean hog futures have eroded during early trade as traders are quickly pulling back from the sharp gains seen early in the week. Corn markets are trading lower in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 28 points lower while Nasdaq is down 8 points.

LIVE CATTLE:

Opening call: 50 cents to $1 higher. Firm buyer support has redeveloped early Thursday morning as follow through commercial interest has stepped back into the complex. This has moved back into the complex as traders focus on potential cash cattle trade developing and the higher moves developing in the beef cutout values. This could quickly allow live cattle futures to move to aggressive triple-digit gains as buyers fill back into the complex with the expectation that additional support will come back into the complex. Cash cattle markets are starting to show increased activity with early bids seen in the north with bids developing in Nebraska at $101 live and 163 dressed. Packer interest should improve over the next several hours in all areas, although active trade may not be seen until later in the week. Asking prices are still holding at $107 to $108 live and $168 to $170 dressed. Open interest Wednesday added 3,204 positions (318,337). Spot October lost 2,924 positions (130,346) and December contracts added 3,852 positions (89,762). DTN projected slaughter for Thursday is 118,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1 higher. Early buyer support is stepping back into the feeder cattle market Thursday morning following the ability to gain moderate commercial interest midweek. This could help to draw additional momentum back into the complex over the morning hours as traders focus on outside markets factors and building fundamentals. Cash lean index for 9/5 is $145.85, up 0.58. Open interest Wednesday added 355 position (50,701).

LEAN HOGS:

Opening call: Steady to 1 lower. Firm pressure is quickly moving back into lean hog futures trade as trades are adjusting to the aggressive $3.50 per cwt rally seen in the lean hog complex over the last week. The current market pullback seems to have some legs at this point, but may not have significant follow through impact as traders still remain focused on the commercial support seen through the beginning of the month that could help to rebuild underlying pork market support over the next couple of weeks. Cash bids steady to $2.00 lower with bids scattered through the range. Open interest Wednesday added 2,290 positions (249,149). Spot month October slipped 1,312 positions (91,559) and December added 3,526 positions (71,667). Cash lean index for 9/5 is $70.33, down 1.03. DTN projected slaughter for Thursday is 450,000 head. Expectations for Saturday's procurement runs are at 380,000 head.

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

(SK)

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