DTN Before The Bell-Livestock

Light Pressure Developing in Livestock Trade

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Weakness has developed early Thursday morning in all livestock trade. The inability to bring buyers back to the complex following firming cattle market activity midweek is causing some concerns that downward pressure may quickly continue over the next couple of trading sessions. Corn futures are lower in light trade. Stock market futures are higher. Dow Jones is 135 points higher while Nasdaq is up 55 points.

LIVE CATTLE:

Open: 10 to 60 cents lower. Despite the bounce higher Wednesday in live cattle futures following early week cash market trade, the tone of the market remains under pressure with sellers quickly stepping back into the market. Trade is still narrow in the first few minutes of activity, but the pressure and lack of follow through buying may spark increased weakness through the end of the week. Cash cattle markets are inactive early Thursday morning following moderate to active trade through the cattle complex midweek. Prices were seen at $119 live basis and #188 to $190 per cwt dressed. This is $2 to $4 per cwt lower from last week's levels, but steady with prices that developed early in the week. There could be some clean up trade seen through the end of the week, but the tone of the market has been set, and prices are not expected to change significantly. Open interest Wednesday added 1,281 positions (387,318). Spot December lost 5,287 positions (63,032) and February contracts added 4,219 positions (155,901). DTN projected slaughter for Thursday is 118,000 head.

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FEEDER CATTLE:

Open: 30 to 70 cents lower. Feeder cattle futures have pulled back from the moderate gains seen midweek. The potential to bring stability into the market following early week losses is creating some challenges as the overall tone of the market remains weak. This could add even more volatility to the market through the last couple days of the week and spark increased pressure in most contract months. Cash lean index for 11/13 is unavailable at this time. Open interest Wednesday lost 590 position (61,410).

LEAN HOGS:

Open: 50 cents to $1 lower. Moderate follow-through pressure is seen through the lean hog futures complex with traders focusing on additional weakness seen through the week. Even though front month December contracts bounced higher Wednesday, the overall tone of the market remains weak, allowing room for additional market pressure over the next few trading sessions. Cash bids are called steady to $1 lower bids scattered through the range. Open interest Wednesday liquidated 7,343 positions (261,151). Spot month December slipped 5,217 positions (48,661) and February fell 1,445 positions (91,846). Cash lean index for 11/13 is $66.68, down 0.32. DTN projected slaughter for Thursday is 465,000 head. Saturday runs are expected to be near 153,000 head.

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

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Rick Kment