DTN Before The Bell-Livestock

GENERAL COMMENTS

Cattle futures have posted strong market losses early Monday morning following the aggressive triple-digit pressure seen in the feeder cattle complex. This is creating some increased long term weakness in all markets and likely will lead to additional liquidation through the morning. Narrow gains are holding across lean hog futures early Monday as sluggish market activity is expected to continue to hold. Corn futures are higher in light trade. Stock market futures remain mixed. Dow Jones is 26 points higher while Nasdaq is down 2 points.

LIVE CATTLE:

Open: 50 cents to $1.30 lower. Strong pressure is seen in most live cattle futures early Monday with early spring 2018 contracts holding the brunt of market losses across the complex. This is creating additional pressure in all cattle trade with feeder cattle futures creating widespread market losses and causing some additional uncertainty in deferred futures. This lack of support through the complex has continued to limit the ability of bringing buyers back into the market. Sluggish activity is expected to be seen through most of the morning as pressure in feeder cattle trade will be hard to overcome in most live cattle contracts. Cash cattle activity is quiet early Monday morning with traders focusing on steady cash trade which developed last week. Early show list distribution and inventory taking is the main order of business of the day and likely will be the extent of any cash activity for the day. Open interest Friday gained 645 positions (328,242). Spot October lost 932 positions (4,272) and December contracts slipped 1,357 positions (142,004). DTN projected slaughter for Monday is 117,000 head.

FEEDER CATTLE:

Open: $1 to $2 lower. Sharp losses have flooded through the feeder cattle futures with November through March contracts trading $2 per cwt lower at opening bell. This renewed pressure early in the week has caused traders to test short term support levels seen through the middle of last week, with the potential of additional pressure building through the upcoming trading sessions. There may be additional widespread liquidation developing later Monday as gains Friday have been unable to hold and have unleased widespread pressure in all contracts. Cash lean index for 10/19 is $154.79, down 0.39. Open interest Friday added 333 position (61,464).

LEAN HOGS:

Open: Steady to 30 cents higher. Narrow gains are slowly redeveloping early Monday morning as the momentum seen across the complex has continued to develop in all nearby lean hog futures. But lackluster interest is seen as traders seem to be focusing on the ability to draw support back into the front-month December contract but may have a hard time finding additional support in other nearby contracts. There is very little activity through the market, which may keep prices within a narrow range through the entire session but as prices continue to test resistance levels, traders are looking for additional long term support. Cash bids are called steady to $1 per cwt higher with bids scattered through the range. Open interest Friday added 1,333 positions (248,920). Spot month December slipped 1,715 positions (116,460) and February added 1,039 positions (48,733). Cash lean index for 10/19 is $64.21, up 0.87. DTN projected slaughter for Monday is 465,000 head.

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

(SK)

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