DTN Before The Bell-Livestock

GENERAL COMMENTS

Feeder cattle futures and lean hog futures are setting the tone early Tuesday morning for the higher moving market shift. Trade volume remains sluggish in all markets, which may limit overall market support through the rest of the morning. Corn markets are trading lower in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 49 points higher while Nasdaq is up 15 points.

LIVE CATTLE:

Open: Mixed. Narrow losses have slowly developed in nearby contracts with most of these contract months posting single digit losses in early minutes of trade. The ability to draw narrow gains into the complex is seen in deferred futures, although most of this buyer support is driven by the firm price bounce seen in feeder cattle trade. Traders are slow to quickly move back into the market during early month trade, although there could be some additional interest developing later in the day. Cash cattle markets remain at a standstill with bids and asking prices still undeveloped and traders focusing on the current moves in both futures trade as well as development of beef values during early October. It is likely that most trade will be pushed off until the last couple days of the week with very little additional information developing at this time. Open interest Monday fell 982 positions (333,254). Spot October lost 3,087 positions (35,747) and December contracts added 455 positions (146,957). DTN projected slaughter for Tuesday is 118,000 head.

FEEDER CATTLE:

Open: 50 to 80 cents higher. Short covering has quickly moved into the feeder cattle market following the aggressive losses which were seen early Monday. This may help to bring renewed stability back to the complex as traders look for increased trade activity over the next couple of days. But the continued lack of support in live cattle markets may limit follow through buying during the rest of the morning. Cash lean index for 9/29 is $154.30, up 1.54. Open interest Monday liquidated 1,555 position (59,064).

LEAN HOGS:

Open: 50 cents to $2 higher. Aggressive early buyer support has redeveloped in front-month October contracts as traders continue to narrow the October to December spread. The triple-digit rally seen in all nearby contracts Monday has helped to bring additional support back to the market and could help to support additional market interest. October futures posted a $1.70 per cwt rally during the early minutes of trade, although there are questions surrounding the follow through support available through the rest of the session. Open interest Monday added 2,520 positions (261,266). Spot month October slipped 1,981 positions (31,216) and December fell 439 positions (118,574). Cash lean index for 9/29 is $54.29, down 0.55. DTN projected slaughter for Tuesday is 460,000 head. Saturday runs are expected at 237,000 head.

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

(SK)

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