DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm buyer support has stepped back into the lean hog futures complex. This is adding additional support to the overall market, but the initial support seen in cattle trade may be harder to sustain through the rest of the week. This could lead to additional market swings late Thursday. Corn futures are mixed in light trade. Stock market futures are higher Dow Jones is 75 points higher while Nasdaq is up 4 points.

LIVE CATTLE:

Open: Steady to 30 cents higher.

Initial buyer interest is seen early Thursday morning in most contracts. But the overall lack of follow-through support could quickly limit additional price support and allow markets to move back to the pressure seen earlier in the week. Trade volume across the market remains sluggish, which may add even more uncertainty to the complex leading to the Christmas break. Cash cattle markets are quiet at this point, following moderate trade in all areas late Wednesday. The flood of activity that stepped into the market late helped to push prices steady to $2 per cwt higher. There may be some clean-up activity, but due to the reduced schedules next week, business may be done for the week. Open interest Wednesday fell 867 positions (333,790). Spot December lost 1,713 positions (3,133) and February contracts fell 1,419 positions (124,015). DTN projected slaughter for Thursday is 117,000 head.

FEEDER CATTLE:

Open: $0.50 to $0.75 higher.

Short-covering is seen early Thursday morning following losses that reached $3.50 per cwt lower midweek. The underlying tone of the market remains weak given that prices have blown through nearby support levels are trading at levels not seen sense September. This could help draw some underlying buying back into the market, but the concern that buyer depth may not be able to hold markets higher could give way to midday market pressure. Cash lean index for 12/19 is listed at $152.47, down 0.03. Open interest Wednesday lost 75 positions (54,082).

LEAN HOGS:

Open: Steady to 30 cents higher.

Follow-through buyer support is slowly trickling into the lean hog complex as traders try to take advantage of the upward market momentum seen over the last couple of days. Early support is sluggish although the firming tone could help to push prices higher through the next couple of days when pre-holiday trade activity is expected to remain light. Cash bids are steady to $1 per cwt lower. Most bids are steady to 50 cents lower. Open interest Wednesday added 824 positions (227,850). Spot month February fell 344 positions (88,548) and April added 542 positions (59,406). Cash lean index for 12/19 is $62.38, down 0.33. DTN projected slaughter for Thursday is 465,000 head. Saturday runs are expected at 135,000 head.

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

(BAS)

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