DTN Before The Bell-Livestock

GENERAL COMMENTS

Sharp early morning gains have flooded into the cattle complex early Monday with traders focusing on the sharp cash market support seen late last week. This is posting triple digit gains in all feeder cattle markets, while nearby live cattle futures are trading sharply higher. Hog futures remain directionless in the early minutes of trade as lack of direction continues to be a challenge for the lean hog complex Monday morning. Corn futures are lower in light trade. Stock market futures are mixed. Dow Jones is 56 points lower while Nasdaq is up 7 points.

LIVE CATTLE:

Open: $1 to $4 Higher. Sharp early morning rallies are quickly developing in live cattle futures Monday as traders focus on the aggressive market shift seen in cash cattle trade. With cash values skyrocketing $5 to $9 per cwt higher at the end of last week, traders in nearby contracts are aggressively moving prices higher. October contracts are currently $4.57 per cwt higher as daily trading limits in the October do not apply because the October contract is in delivery. Other nearby contracts are trading $1 to $2 per cwt higher which is likely the more typical range that may continue to gain buyer support through the complex. Cash cattle markets are expected to move back into the sluggish and undeveloped movement following the sharply higher prices which developed late Friday afternoon. Show list distribution and inventory taking will be the main order of business. Both sides will be closely watching for confirmed numbers of cattle traded last week given the fact that prices surged so aggressively in all areas. Open interest Friday gained 2,710 positions (347,336). Spot October lost 630 positions (762) and December contracts liquidated 3,964 positions (136,083). DTN projected slaughter for Monday is 116,000 head.

FEEDER CATTLE:

Open: $1 to $2 higher. Buyers in the feeder cattle market are just trying to keep up through the initial minutes of trade. This is allowing prices to hold gains of $1.30 to $2 per cwt in nearby contracts with all markets holding double digits early Monday morning. The focus on higher cash cattle values and the ability to spark widespread gains in live cattle markets is helping to bring traders to the market despite light volume. Cash lean index for 10/26 is $155.12, up 0.72. Open interest Friday added 506 position (64,798).

LEAN HOGS:

Open: Mixed. So far, the lean hog futures complex has remained immune to the aggressive buyer support and price rally, which has developed across the cattle complex. This is keeping prices mixed in a narrow range from 30 cents lower to 20 cents higher. The lack of consistency in the complex is limiting both trade volume and the ability to set a course of market direction through the end of the month. Traders will continue to focus on both outside market shifts and the aggressive gains seen in cattle futures as more volume moves into the complex over the next several hours. Cash bids are called 50 cents higher to 50 cents lower with most bids steady. Open interest Friday added 956 positions (258,492). Spot month December slipped 1,380 positions (109,111) and February added 396 positions (55,471). Cash lean index for 10/26 is $68.94, up 0.66. DTN projected slaughter for Monday is 465,000 head.

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

(SK)

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