DTN Before The Bell-Livestock

GENERAL COMMENTS

Sharp losses have quickly redeveloped across the live cattle and feeder cattle markets. This may lead to additional triple-digit pressure in most contracts. Corn futures are higher in light trade. Stock market futures are higher. Dow Jones is 2 points higher while Nasdaq is up 5 points.

LIVE CATTLE:

Open: 50 to 90 cents lower. Strong pressure is redeveloping across the live cattle futures complex. This is driven by additional triple-digit losses in feeder cattle futures in the opening minutes of trade. Traders remain concerned about the inability to hold support levels, which is creating additional liquidation across the complex. Cash cattle interest remains quiet with a few bids slowly developing through the morning. Bids in the South are seen at $117 per cwt, while asking prices are seen at $120 and higher. Asking prices are still unavailable in the North at this point. The few sales which developed late Tuesday was not enough to get an accurate trend on the market and in a wide and variable price range. The shift in futures trade Tuesday may spark additional weakness to the complex. Open interest Tuesday liquidated 3,112 positions (361,892). Spot December lost 1,257 positions (17,791) and February contracts fell 2,777 positions (148,293). DTN projected slaughter for Wednesday is 118,000 head.

FEEDER CATTLE:

Open: $1 to $2 Lower. Strong follow-through pressure has continued to develop across the market with increased price moves expected to be seen through much of the morning. This triple-digit follow-through losses has continued to spark weakness across the entire complex. Cash lean index for 12/4 is listed at $156.30, down 0.39. Open interest Tuesday added 570 positions (57,508).

LEAN HOGS:

Open: Mixed. Light gains are slowly trickling into the lean hog futures complex with most contracts holding gains of 2 to 7 cents per cwt higher. The inability to move prices significantly continues to focus on the general lack of activity through the morning as trades try to rebuild some market stability following the triple digit losses Tuesday. The underlying tone of the market remains firm, although pressure in cattle trade may spark additional uncertainty through the session. Cash bids are steady to $1 per cwt lower. Most bids remain steady. Open interest Tuesday fell 2,368 positions (252,973). Spot month December slipped 2,103 positions (18,399) and February lost 467 positions (101,272). Cash lean index for 12/04 is $64.35, up 0.43. DTN projected slaughter for Wednesday is 465,000 head. Saturday runs are pegged at 215,000 head.

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

(BAS)

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