DTN Before The Bell-Livestock

GENERAL COMMENTS

Light buyer support is seen across cattle and hog futures early Wednesday morning. Traders are focusing on the recent support in feeder cattle and lean hog trade that has developed. This is bringing additional longer term support back into the complex over the near future. But end of the month positioning is starting to develop in all markets. Corn futures are higher in light trade. Stock market futures are higher. Dow Jones is 104 points higher while Nasdaq is down 25 points.

LIVE CATTLE:

Open: Steady to 30 cents higher. Firm buyer support has moved into the complex through the first few minutes of trade midweek. This latest round of buying has helped to push front month futures above $120 per cwt. This could spark additional support through the end of the month, although traders still are focusing on prices well below October highs. This may add even more volatility to the market over the coming weeks. Cash cattle are still quiet with very light activity expected through the day. Although active trade is not expected to be seen until late in the week, the development of The Fed Cattle Exchange may give more definition to the complex. Open interest Tuesday fell 615 positions (379,847). Spot December lost 2,633 positions (36,640) and February contracts gained 179 positions (156,157). DTN projected slaughter for Wednesday is 118,000 head.

FEEDER CATTLE:

Open: Mixed. Activity levels have moved into the complex with traders focusing on firming follow through buying seen in nearby contracts despite the uncertainty in deferred contracts. The softness through the week in fundamentals and lack of cash cattle trade is still keeping some traders unwilling to break away from the recent market shifts. Cash lean index for 11/27 is listed at $156.75, up 1.49. Open interest Tuesday lost 601 positions (56,382).

LEAN HOGS:

Open: Steady to 30 cents higher. Narrow follow-through gains have developed early Wednesday morning as traders continue to work the recent market support through the complex. Some end of the month market adjustments are likely to be seen through the end of the month. This could spark some additional support over the near future as traders are now starting to assess firming fundamental market support. Cash bids are called steady to $1 lower with most bids steady. Open interest Tuesday added 3,566 positions (250,565). Spot month December slipped 3,066 positions (28,740) and February added 3,013 positions (96,427). Cash lean index for 11/27 is $62.89, down 0.19. DTN projected slaughter for Wednesday is 465,000 head. Saturday runs are expected to run near 238,000 head.

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

(BAS)

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