DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong pressure is redeveloping in cattle trade early Wednesday following triple-digit losses that flooded the market Tuesday. This could continue to bring liquidation back into the market and spark increased short-term selling. Corn futures are lower in light trade. Stock market futures remain mixed. Dow Jones is 119 points higher while Nasdaq is down 2 points.

LIVE CATTLE:

Open: 30 to 80 cents lower. Follow through pressure is quickly developing in live cattle futures. The inability for the firm undertone seen early in the week to hold Tuesday afternoon has drawn additional liquidation to the market. This could spark additional weakness through the morning which is adding early pressure to October futures. Cash cattle markets remain quiet early Wednesday morning, although packer interest is expected to develop as the day continues. The Fed Cattle Exchange Auction will trade through the morning, potentially giving some direction to cash cattle markets for the week. It is still expected that most active trade will be delayed until late Thursday or Friday. Open interest Tuesday fell 578 positions (330,045). Spot October lost 663 positions (7,790) and December contracts slipped 1,597 positions (147,042). DTN projected slaughter for Wednesday is 118,000 head.

FEEDER CATTLE:

Open: Steady to 90 cents lower. Narrow support is trying to hold in front month October futures due to traders rolling positions to November contracts. But the remainder of the complex has posted strong losses early Wednesday following the aggressive turn lower Tuesday. This could spark additional liquidation across the complex. Cash lean index for 10/16 is $155.06, down 0.60. Open interest Tuesday fell 498 position (60,859).

LEAN HOGS:

Open: 10 to 60 cents higher. Light buyer support is slowly stepping back into the complex following sharp losses Tuesday. The focus on short covering is likely going to be replaced by moderate to aggressive cash hog support developing through the end of the week. It is uncertain just how deep buyer activity will remain through the end of the week. Cash bids are called steady to $2 per cwt higher with most bids expected to be $1 higher. Open interest Tuesday liquidated 5,588 positions (249,704). Spot month December slipped 970 positions (117,765) and February added 494 positions (46,840). Cash lean index for 10/16 is $61.00, down 0.24. DTN projected slaughter for Wednesday is 465,000 head. Saturday runs are expected to hit 195,000 head.

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

(SK)

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