DTN Before The Bell-Livestock

Narrow Price Ranges Leave Cattle Markets Mixed

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Mixed cattle trade has been seen early Tuesday following sharp limit losses in several contracts Monday. This may spark some stability through the morning, although the overall tone of the market remains weak. Lean hog futures remain under pressure as the focus on softer cash markets is eroding buyer activity. Corn markets are trading mixed in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 63 points higher while Nasdaq is up 29 points.

LIVE CATTLE:

Opening call: Mixed. Initial trade in live cattle futures remains mixed with a combination of follow through selling activity and light short covering trying to develop early Tuesday morning. This may leave markets undirected through the first hour of trade, although it appears that the general tone of the complex remains weak, as traders may continue to push prices lower through the session. Concerns surrounding the strong pullback in cattle trade and lack of overall buyer support may limit additional buyer activity through the rest of the morning. Cash cattle markets are starting to show a little life with initial token bids seen early Tuesday morning. Bids through parts of the South are developing at $104 per cwt, although this is unlikely to get much attention through the day as early asking prices in the South are seen at $110 per cwt. Bids and asking prices in the North are quiet at this point and may remain that way through most of the day. Open interest Monday gained 429 positions (337,115). Spot October lost 3,276 positions (53,529) and December contracts added 2,074 positions (141,941). DTN projected slaughter for Tuesday is 118,000 head.

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FEEDER CATTLE:

Opening call: Mixed. Following limit losses Monday, the feeder cattle has access to expanded trading limits through the day Tuesday. But one would not guess that given the extremely narrowly mixed trade seen through the opening minutes of trade early Tuesday morning. Prices are hovering from 20 cents lower to 5 cents higher in nearby contracts, although there is the expectation that prices will deviate from this pattern as more volume stepps into the complex. Cash lean index for 9/22 is $152.60, up 1.26. Open interest Monday gained 589 position (58,102).

LEAN HOGS:

Opening call: Steady to 50 cents Lower. Light pressure is slowly trickling into the lean hog futures trade with very light early volume developing across the entire complex. The continued pressure expected in cash hog values through the week is expected to add even more softness to the lean hog complex with most of this pressure based in deferred contracts. Nearby futures are hovering from 20 to 30 cent losses, while 40 to 50 cent losses are quickly developing in summer 2018 contract months based on supply concerns through next year. Cash bids are 50 cents to $1.50 lower with most $1 to $1.50 lower. Open interest Monday added 1,364 positions (264,085). Spot month October slipped 888 positions (44,291) and December added 2,040 positions (115,887). Cash lean index for 9/22 is $57.66, down 1.24. DTN projected slaughter for Tuesday is 455,000 head. Procurement Saturday is expected at 240,000 head.

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

(SK)

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Rick Kment