DTN Before The Bell-Livestock

GENERAL COMMENTS

Sluggish trade is seen across all livestock markets with cattle futures trading mixed to mostly lower, although trading ranges have remained narrow early Tuesday morning. This lack of follow-through buyer support is focused on position adjustments through the end of October. Light gains are seen across the hog complex, leaving trade volume sluggish. Corn futures are lower in light trade. Stock market futures are mixed. Dow Jones is 2 points lower while Nasdaq is up 17 points.

LIVE CATTLE:

Open: Steady to 40 cents lower. Narrow market pressure is starting to be seen in the opening minutes of trade across live cattle futures. The initial mixed trade seen across the complex has allowed for follow through selling activity even though trade remains very light. Trade volume and market movement is likely to remain subdued through most of the session as traders try to protect the sharp gains seen Monday as well as position current holdings for the end of the month. Cash cattle activity remains at a standstill with bids and asking prices still generally undefined at this point. The overall firmness in cash markets last week combined with aggressive early-week futures trade will keep feeders bullish through the week. Trade is expected to be delayed until late in the week once again. Open interest Monday gained 4,600 positions (351,822). Spot October lost 641 positions (121) and December contracts liquidated 2,526 positions (133,524). DTN projected slaughter for Tuesday is 118,000 head.

FEEDER CATTLE:

Open: Mixed. Light trade is trickling into the feeder cattle complex early Tuesday morning with the focus on squaring positions at the end of the month following the aggressive rally that developed across all cattle trade Monday. The strong triple-digit gains seen in the market Monday have given traders room to adjust positions early Tuesday morning. This may continue draw buyer support back into the complex as volume increases through the day. Cash lean index for 10/27 is $154.93, down 0.21. Open interest Monday fell 2,060 positions (62,622).

LEAN HOGS:

Open: 30 to 50 cents higher. Follow-through buying has quickly stepped into the lean hog futures trade with contracts holding gains of 15 to 55 cents per cwt across the complex. The focus on increased buyer support through the end of month is offsetting the expectation that early cash bids are expected steady to lower. There seems to be some additional catchup moving into the market from commercial traders following the shift higher in cattle trade Monday. Cash bids are called steady to $1 lower with most bids steady to 50 cents lower. Open interest Monday added 2,194 positions (260,504). Spot month December slipped 1,225 positions (107,815) and February added 1,995 positions (57,375). Cash lean index for 10/27 is $69.09, up 0.15. DTN projected slaughter for Tuesday is 465,000 head. Saturday runs are expected at 170,000 head.

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

(SK)

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