DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm buyer support has steadily moved into nearby feeder cattle and lean hog futures as traders continue to focus on the balance between commercial buying interest moving into the market during the week and fundamental market shifts that may develop over the next couple of days. Live cattle markets remain subdued in very sluggish trade as prices are holding a narrowly mixed price pattern. Corn markets are trading lower in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 21 points higher while Nasdaq is down 2 points.

LIVE CATTLE:

Opening call: Mixed. Initial trade has hovered from 25 cents per cwt lower to 5 cents higher in the first few minutes of trade Tuesday. This lack of direction is following the sluggish market movement seen through the end of the session Monday. Even though strong aggressive gains have quickly developed in feeder cattle futures, the inability for live cattle markets to keep pace with this upward support is not considered overly bearish at this point. Traders remain cautious, but continue to focus on the direction of beef values and potential cash market moves over the near future. Cash cattle markets remain quiet with very activity expected during the day. A few asking prices have started to slowly develop through the South at $108 to $109 per cwt. But the rest of the market remains silent. Bids are not likely to be seen until later today at the earliest. This could spark some additional activity, but most sales are likely to be pushed off toward the end of the week. Open interest Monday gained 1,250 positions (326,101). Spot October lost 5,613 positions (77,293) and December contracts added 3,370 positions (124,601). DTN projected slaughter for Tuesday is 118,000 head.

FEEDER CATTLE:

Opening call: Steady to 10 cents lower. Narrow losses have slowly trickled into the market early Tuesday morning with traders trying to square positions following the triple digit gains seen early in the week. With prices hovering from 5 to 10 cents per cwt lower in the opening minutes of trade, there is very little direction developing through the complex. It is quite possible that additional selling activity will be seen through the morning which could further limit overall market interest through the complex. Cash lean index for 9/15 is $150.09, up 0.36. Open interest Friday gained 1,127 position (53,198).

LEAN HOGS:

Opening call: Steady to 50 cents higher. The ability for buyers to move back into the market through the Monday session in several contracts helped to draw increased buyer support through the entire complex early Tuesday morning. Even though trade volume remains light and overall gains remain narrow at this point, the firmness in the tone of the complex is helping to draw unified support through the entire market. At this point, most contracts are holding 20 to 22 cent gains, although the focus on the direction of pork values and outside markets will play a significant role in follow through activity through the rest of the day. Cash bids are steady to $1.50 lower with bids scattered through the range. Open interest Monday added 6,314 positions (265,288). Spot month October slipped 947 positions (65,204) and December added 4,136 positions (104,457). Cash lean index for 9/15 is $62.82, down 1.43. DTN projected slaughter for Tuesday is 450,000 head. Saturday runs are expected to be seen at 225,000 head.

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

(SK)

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