DTN Before The Bell-Livestock

Light Gains Trickle Into Cattle Futures

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

Light price support Tuesday in live cattle and feeder cattle trade could help to draw commercial buyers back to the market after the recent market weakness. Hog futures continue lower despite light trade.

Mixed trade remains in livestock futures as cattle markets are holding narrow-to-moderate gains in early activity. The pressure returning to the hog complex may add additional longer-term liquidation to the entire market. Corn futures are lower in light trade. Stock market futures are mixed. Dow Jones is 106 points higher while Nasdaq is down 2 points.

LIVE CATTLE:

Open: Steady to 40 cents higher.

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Firm gains are slowly developing across the live cattle complex. This is helping to draw additional support back into the market even though the recent market tumble has caused traders to focus on additional longer-term pressure. Cash cattle markets remain quiet with little additional direction developing in the near future. There is additional focus on outside market direction as traders look for activity developing later in the week. Bids and asking prices remain generally quiet with the focus on outside markets and potential fundamental moves. Open interest Monday liquidated 4,496 positions (340,196). Spot December lost 1,415 positions (10,853) and February contracts fell 2,965 positions (135,052). DTN projected slaughter for Tuesday is 118,000 head.

FEEDER CATTLE:

Open: Steady to 20 cents Higher.

Light gains have developed slowly through cattle trade with the feeder cattle markets focusing on short-covering through the first few minutes of trade. Gains in most contracts are holding minimal 5 cent to 7 cent gains with little additional support expected over the next couple of hours. Increased long-term pressure continues in the market, which may limit long-term growth. Cash lean index for 12/8 is listed at $154.32, down 0.08. Open interest Monday slipped 240 positions (54,668).

LEAN HOGS:

Open: Mixed.

Initial trade in lean hog futures contracts remains sluggish with prices hovering between 20 cents lower and 15 cents higher. The overall lack of direction in the complex continues to bring some increased market support to fundamentals with front-month futures holding narrow gains. The rest of the complex is posting slight losses with little momentum expected after posting strong losses through Monday's session. Cash bids are steady to $1 per cwt lower. Most bids are steady to 50 cents lower. Open interest Monday fell 1,156 positions (244,636). Spot month December slipped 635 positions (12,886) and February lost 1,852 positions (96,307). Cash lean index for 12/08 is $65.17, down 0.31. DTN projected slaughter for Tuesday is 465,000 head. Saturday runs are expected to hit 245,000 head.

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

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Rick Kment