DTN Before The Bell-Livestock

Early Commercial Selling Seen

(DTN photo by Nick Scalise)
GENERAL COMMENTS

Initial trade in live cattle and lean hogs saw commercial selling take chart, while feeders were quietly higher. Dec live cattle are down $0.70, Jan feeders are up $0.10, and Dec lean hogs are off $0.60.

LIVE CATTLE:

As discussed in this past Monday's Technically Speaking blog on DTN, the December live cattle contract finds itself in a precarious technical position early Friday. From a technical point of view, it would actually be better for the contract to close the price gap left the previous week between $121.625 and $122.325 to take the potential for an Island Top formation out of the picture. The early low is $121.775. Fundamentally the market has been hit by heavy commercial selling this week, with the December-to-February moving to a spread of nearly (-$6.00).

FEEDER CATTLE:

The market is showing early strength, likely supported by the continued sell-off in corn. Jan feeders have seen a wide range this week, and while in position to establish a secondary (intermediate-term) downtrend on weekly charts, at least closed a price gap similar to what was discussed in live cattle. Futures spreads are mixed early indicating most of the initial buying interest is coming from noncommercial traders.

LEAN HOGS:

December lean hogs are being hit with heavy commercial selling early Friday, losing about $0.50 in comparison to the Feb loss of $0.20. Technically Dec hogs are in free-fall mode, sitting near the week's low of $62.60 and building bearish momentum. As with live cattle, pressure in hog futures has come from commercial selling throughout the week with the December-to-February spread sitting at (-$7.30) Friday morning.

Darin Newsom can be reached at darin.newsom@dtn.com

(SK)

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