DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong market support is redeveloping in cattle futures with feeder cattle markets holding triple-digit gains in the early minutes of trade. Additional market shifts are likely in lean hog trade as follow-through pressure is developing. Corn futures are higher in light trade. Stock market futures are higher. Dow Jones is 54 points higher while Nasdaq is up 27 points.

LIVE CATTLE:

Open: Steady to 60 cents higher.

Increased buyer support is expected. There is likely to be some additional underlying support through the morning as aggressive triple-digit gains are seen in feeder cattle markets. So far, buyers seem to be well focused on stable market support, but this could quickly break into widespread market moves. Cash cattle activity is expected to remain quiet early in the day Wednesday, although bids and asking prices are likely to become more available through the next day or two. This is likely to be initiated by the Fed Cattle Exchange trading Wednesday morning with additional support seen through the complex through the end of the week. Open interest Tuesday liquidated 57 positions (339,255). Spot December lost 800 positions (10,053) and February contracts fell 437 positions (133,884). DTN projected slaughter for Wednesday is 118,000 head.

FEEDER CATTLE:

Open: $1 to $1.50 Higher.

Firm follow-through support is moving into the market as traders continue to focus on increased activity. This could bring additional strength to the entire cattle complex as increased volume is likely to develop through the end of the week. Cash lean index for 12/11 is listed at $154.11, down 0.19. Open interest Tuesday slipped 704 positions (53,951).

LEAN HOGS:

Open: Steady to 50 cents lower.

Light to moderate pressure is developing across lean hog futures. This is likely to bring additional light liquidation at midweek with very little support developing in fundamental markets at this point. Light trade is expected, and may keep markets weaker most of the day. Cash bids are steady to $1 per cwt lower. Most bids are $1 lower. Open interest Tuesday fell 2,381 positions (242,107). Spot month December slipped 1,149 positions (11,737) and February lost 2,327 positions (93,980). Cash lean index for 12/08 is $65.17, down 0.31. DTN projected slaughter for Wednesday is 465,000 head. Saturday runs are expected to hit 247,000 head.

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

(BAS)

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