DTN Before The Bell-Livestock

GENERAL COMMENTS

Live cattle futures are mixed while the rest of the livestock complex continues to focus on follow through pressure after the aggressive and swift moves lower midweek. The concern that pressure over the last week will spark additional widespread liquidation has many traders still focusing on further market pressure. Corn futures are lower in light trade. Stock market futures are higher. Dow Jones is 2 points higher while Nasdaq is up 15 points.

LIVE CATTLE:

Open: Mixed. Initial live cattle futures markets are mixed in a narrow trading range from 12 cents lower to 12 cents higher as traders try to balance between follow through selling activity and short covering. The extremely light trade volume seen in the market is adding to the lack of direction through the morning. Generally the tone of the cattle market remains weak, but given the recent volatility, prices have room to move in either direction without creating any long term market surprises. Cash cattle activity remains quiet early Thursday morning following light to moderate trade that took place mostly in the North. The lions share of trade in the North is likely to have been already done, although it is expected that some clean up activity will develop over the last couple of days this week. Southern trade has seen some deals trickle into the market, although additional movement is expected. Bids are redeveloping near $117 per cwt, similar to the light trade developing over the last couple of days. Open interest Wednesday liquidated 5,424 positions (355,649). Spot December lost 2,471 positions (15,320) and February contracts fell 2,400 positions (145,195). DTN projected slaughter for Thursday is 118,000 head.

FEEDER CATTLE:

Open: 20 to 50 cents lower. Follow through pressure quickly developed to move into the already weak market Thursday morning. This generally lack of market support pushed prices lower, but trade remains extremely light, which could allow for mixed price direction through the complex. There is growing uncertainty as to just how much additional long term pressure will develop over the near future, but with the latest round of bearish fundamental shifts, traders are likely to trend for market pressure than a rally before the end of the week. Cash lean index for 12/5 is listed at $156.11, down 0.19. Open interest Wednesday liquidated 877 positions (56,499).

LEAN HOGS:

Open: Steady to 50 cents lower. Firm follow-through pressure is developing across the lean hog futures complex as traders continue to focus on the underlying pressure developing in the cattle market and what impact this will have on short and long-term market direction in the hog complex. Front-month December contracts seem to desire to move higher, although the pressure across the rest of the market has limited buyer support and is likely to keep most contracts under pressure. This may spark some additional liquidation through the rest of the week. But short covering may quickly develop if traders seen an opportunity due to the light trade. Cash bids are steady to $1 per cwt lower. Most bids remain steady to 50 cents lower. Open interest Wednesday fell 1,790 positions (251,058). Spot month December slipped 1,798 positions (16,601) and February lost 121 positions (101,143). Cash lean index for 12/05 is $64.85, up 0.50. DTN projected slaughter for Thursday is 465,000 head. Saturday runs are seen at 223,000 head.

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

(BAS)

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