DTN Before The Bell-Livestock

GENERAL COMMENTS

Light to moderate pressure has developed early Friday morning as trades try to adjust following the strong market surge in all livestock markets over the last several trading sessions. Even though underlying support remains, the focus on end of the week position taking and price adjustments are the main order of business through early trade. Corn futures are lower in light trade. Stock market futures are mixed. Dow Jones is 32 points lower while Nasdaq is up 82 points.

LIVE CATTLE:

Open: Mixed. Narrow trading ranges in a mixed price level are seen early Friday morning with the focus on strong gains seen earlier in the week. The technical support that has quickly developed across the cattle complex is not trying to gain some underlying backing as traders look for increased overall buyer activity to develop through the end of the week. Firmness in beef values are also likely expected through the end of the week which will help to bring additional support to the recent market rally seen across futures trade. Cash cattle activity remains quiet heading into the home stretch for the week. Even though bids have started to become more prevalent through the day Thursday, the wide gap between asking prices and bids has limited trade interest. Packer activity is likely to increase through the day Friday, although active sales may not be seen until sometime Friday afternoon. Open interest Thursday gained 7,933 positions (344,707). Spot October lost 302 positions (1,392) and December contracts added 1,811 positions (140,078). DTN projected slaughter for Friday is 116,000 head.

FEEDER CATTLE:

Open: 20 to 60 cents lower. Firm gains which developed earlier in the week has caused late day positioning as traders try to adjust to the recent market spike seen across all cattle trade. There is still some uncertainty in cash markets given the fact that deals were unable to be struck Thursday. This could start to affect overall feeder cattle prices, if overall live cattle fundamentals do not quickly follow the upward trend of futures trade. Cash lean index for 10/25 is $154.40, down 0.18. Open interest Thursday added 986 position (64,304).

LEAN HOGS:

Open: Steady to 40 lower. Light to moderate pressure is quickly developing early Friday morning following the additional strong market support seen in lean hog trade Thursday. This is helping to draw additional buyer activity into the market even though position squaring is on the mind of most traders early in the session. The sharp rally in open interest that has developed is also sparking additional underlying support that may likely outlast the early morning pressure across the complex. Cash bids are called steady to 50 cents lower with most bids steady. Open interest Thursday added 4,406 positions (257,619). Spot month December slipped 2,205 positions (110,511) and February added 2,805 positions (55,081). Cash lean index for 10/25 is $68.28, up 0.96. DTN projected slaughter for Thursday is 465,000 head. Saturday runs are expected for 197,000 head.

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

(SK)

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