DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm follow through liquidation is developing in cattle futures. Even though losses have been contained to pressure under $1 per cwt in both live cattle and feeder cattle markets, the underlying softness in the market remains the focus Monday. This pressure is bleeding into the hog complex, and eroding most of the gains seen Friday. Corn futures are lower in light trade. Stock market futures are higher. Dow Jones is 253 points higher while Nasdaq is up 11 points.

LIVE CATTLE:

Open: 30 to 80 cents lower. Strong losses seen Friday have allowed markets to open the door to expanded trading limits following February futures closing limit lower Friday. These wide limits do not seem to be an issue in the early trade Monday as futures are well contained with moderate price pressure limited to sluggish market movement early in the session. But continued weakness is seen across the market. This could bring about additional market softness later in the day. Cash cattle interest is expected to remain generally undeveloped Monday morning with show list distribution and inventory taking seen through much of the day. Bids and asking prices are expected to remain undeveloped as traders try to assess the direction of futures trade through the session. This could limit active trade during the first half of the week. Open interest Friday fell 4,610 positions (373,313). Spot December lost 4,017 positions (28,991) and February contracts gained 447 positions (155,934). DTN projected slaughter for Friday is 116,000 head.

FEEDER CATTLE:

Open: 50 to 75 cents lower. Extreme pressure which developed Friday as traders entered the month of December has created additional pressure to the complex. This is drawing follow through liquidation into all contracts with firm market losses seen across the market. It is uncertain just how much additional liquidation will develop through the day, but traders remain on the defensive as they try to find support levels in any area of the cattle complex early in the week. Cash lean index for 11/30 is listed at $157.20, up 0.28. Open interest Friday fell by 625 positions (57,397).

LEAN HOGS:

Open: Mixed. Light pressure has developed early Monday morning as the focus on sharp losses in the cattle market has started to impact the overall direction of the hog complex. Losses in the market remain very limited, with overall trading ranges contained to a range from 30 cents lower to 20 cents higher in light initial trade. The focus on potential spill over softness in cattle trade may be the driving factor in hog futures Monday, as less emphasis is being placed on the overall fundamental moves in the hog or pork complex. Cash bids are called 50 cents lower to 50 cents higher with most bids steady. Open interest Friday lost 132 positions (254,385). Spot month December slipped 1,697 positions (22,502) and February added 378 positions (99,864). Cash lean index for 11/30 is $63.26, up 0.27. DTN projected slaughter for Monday is 465,000 head.

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

(BAS)

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