DTN Before The Bell-Livestock

GENERAL COMMENTS

Light to moderate selling pressure is seen early Tuesday morning. Cattle markets have eased lower based on traders covering positions following the aggressive gains seen over the last week. Lean hog trade continues to post moderate pressure with front month October futures holding a $1 per cwt loss in early trade activity. Corn markets are trading lower in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 67 points higher while Nasdaq is up 6 points.

LIVE CATTLE:

Opening call: Steady to 50 cents lower. Narrow losses have slowly developed early Tuesday morning as October contracts are holding a 17 cent loss in very sluggish market activity with most of the market activity seen in December contracts. Following the aggressive market rally across cattle markets over the last week, commercial traders have posted a narrow correction at this point, but there remains uncertainty as to just how much additional volume will be seen through the session. Cash cattle markets remain quiet Tuesday morning, although bids may start to trickle into the market through the day. There could be some additional movement in asking price levels, although at this point even those levels are not yet well defined. Active trade may still not be seen until the end of the week as both sides may not be serious about trade until midweek or later. Open interest Monday fell 792 positions (323,544). Spot October lost 7,808 positions (114,249) and December contracts added 5,156 positions (101,851). DTN projected slaughter for Tuesday is 118,000 head.

FEEDER CATTLE:

Opening call: Steady to 50 cents lower. Light pressure moved into the feeder cattle market early Tuesday morning with nearby futures holding at $148 to $149 per cwt through the complex. There continues to remain firm buyer support holding on potential long-term support through the complex, although traders are looking to square positions given the $6 to $7 per cwt rally in the market over the last week. Trade volume remains sluggish through the first few minutes of trade, as buyers are focused on potential trade later in the week, and moves in cash and boxed beef values. Cash lean index for 9/8 is $149.01, up 0.76. Open interest Monday slipped 10 position (50,942).

LEAN HOGS:

Opening call: Steady to $1 lower. Follow through pressure quickly developed through early trade Tuesday with front month October contracts focusing on testing $60 per cwt levels The pullback in December contracts has led the market lower which is creating some technical pressure through the entire market. The overall lack of support in cash markets is also leaving some traders looking for even more pressure through the end of September. Trade through most of the morning is likely to remain sluggish, with outside market moves expected to focus on the morning USDA report. Cash bids are 50 cents to $1.50 lower with bids scattered through the range. Open interest Monday added 901 positions (249,109). Spot month October slipped 4,475 positions (78,369) and December added 4,708 positions (82,038). Cash lean index for 9/8 is $67.94, down 1.02. DTN projected slaughter for Tuesday is 450,000 head. Saturday runs are expected to be at 180,000 head.

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

(SK)

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