DTN Before The Bell-Livestock

GENERAL COMMENTS

Front-month live cattle futures have surged to daily trading limits of $3 per cwt gains in the opening minutes of trade Friday. The sharp cash market gains and active trade which developed helped to spark widespread buyer support through all cattle futures. Hog markets remain slightly higher in very quiet market activity with traders still looking for longer term direction. Corn futures are lower in light trade. Stock market futures are mixed. Dow Jones is 11 points lower while Nasdaq is up 3 points.

LIVE CATTLE:

Open: $2 to $3 higher. December live cattle futures have posted limit gains just after opening bell as the sharp rally in cash cattle trade sparked widespread interest through the entire complex. This is the second week in a row where sharp gains have quickly flooded into the cash cattle market. The ability to bring additional buyer support back to the table in all areas of the complex is helping to draw increased underlying support across the live cattle market and all cattle trade. It is expected that additional strong buyer support will continue to develop over the near future. Cash cattle bids are redeveloping Friday morning following active trade in all areas by the end of the day Thursday. Prices in the North increased as much as $10 per cwt with dressed prices listed at $195 per cwt. Prices in the South were seen at $124 to $125 per cwt after a $7 to $8 per cwt rally. It is uncertain just how much more trade will develop before the end of the week, but early bids are seen at the current market price paid Thursday if feeders are willing to part with more cattle at these prices. Open interest Thursday gained 6,502 positions (369,596). Spot December lost 1,970 positions (128,023) and February contracts added 4,566 positions (101,765). DTN projected slaughter for Friday is 116,000 head.

FEEDER CATTLE:

Open: $2 to $4 higher. All attention in the cattle complex has quickly shifted to the aggressive price surge in cash markets. Live cattle futures are locked in limit higher trade in December contracts in the early minutes of trade, which is helping to spark gains above $3 per cwt in nearby feeder cattle futures. There continues to be strong underlying support developing, especially following the triple digit losses which were posted Thursday. Cash lean index for 11/1 is $158.71, up 1.35. Open interest Thursday added 173 position (64,125).

LEAN HOGS:

Open: Steady to 30 cents higher. Narrow gains have slowly developed in several nearby contract months with traders focusing on the ability to gain momentum from the sharp gains which are quickly developing across the live cattle futures. There continues to be some additional buyer interest seen across the market with traders focusing on longer term fundamental support. But the choppy market shifts through the week may make any significant price breakout hard to find through the Friday session. Cash bids are called steady to $1 lower with most bids 50 cents to $1 lower. Open interest Thursday added 3,065 positions (272,186). Spot month December slipped 3,356 positions (101,972) and February added 2,814 positions (66,240). Cash lean index for 11/1 is $69.42, up 0.12. DTN projected slaughter for Friday is 465,000 head. Saturday runs are expected at 164,000 head.

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

(SK)

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