DTN Before The Bell-Livestock

Selling Pressure Returns Thursday

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

Follow-through pressure has quickly developed in most livestock trade as strong losses have been seen in October lean hog futures early Thursday morning. The cattle complex is lightly traded, but the inability to bring buyers back in order to cover short positions is adding some additional concern to the entire complex. Corn prices are lower in light trade. Stock markets are higher, Dow Jones is 16 points higher while Nasdaq is up 31 points.


Open: 10 to 40 cents lower. Moderate to firm pressure is quickly developing once again Thursday morning following the aggressive losses across the entire complex Wednesday. The weaker tone seen in all livestock trade is expected to carry some additional uncertainty in cattle trade and could push prices even lower through the end of the week. Traders are looking for additional long-term support based on seasonal support and firm boxed beef values, but the pressure in outside markets seems to be the main driver of renewed selling pressure. Cash cattle trade is expected to pick up Thursday in the same direction seen late Wednesday. The development of light to moderate trade in the North Wednesday afternoon may be enough to set the tone for the week, even though additional trade is expected in all areas. Prices were seen at $109 to $109.50 live, and $173 to $174 dressed. This is steady to weak with last week's trade levels, and could bring a steady tone into the market for the rest of cattle sold. Asking prices remain at $113 and higher live and $178 dressed. Trade may trickle in through the rest of the week at this point following the initial moves on Wednesday. Open interest Wednesday fell 1,962 positions (295,814). Spot month August contracts lost 2,064 positions (4,430) and October contracts lost 2,594 positions (124,290). DTN projected slaughter for Thursday is 119,000 head.


Open: Mixed. Early trade Thursday morning is mixed to mostly lower with front month August contracts holding a narrow 30 cent gain. The rest of the complex has sparked follow through liquidation with losses of 30 to 50 cents per cwt. There is increased additional uncertainty through the entire livestock market following aggressive triple-digit losses Wednesday. August futures are attempting to bring some stability to the market, while follow through pressure may continue to develop through the morning. Cash index for 8/21 is listed at $149.84, up 0.41. Open interest Wednesday added 155 positions (49,158).


Open: Mixed. Mixed trade is seen as overall market direction is very unsettled through the last half of the week. This is pushing front-month October futures lower with losses nearing $1 per cwt during the first few minutes of trade. There is also some additional pressure scattered through the rest of the complex, although all other contracts remain mixed in a narrow range. Prices through the rest of the complex are seen from 15 cents lower to 20 cents higher as a combination of short covering and follow through selling is seen. Losses in excess of $2 per cwt in nearby contracts midweek has quickly added uncertainty back into the market following the aggressive shift higher over the last couple of weeks. Cash hog trade Thursday is expected steady to $2 lower per cwt. Most bids will be $1 lower. Open interest Wednesday lost 1,022 positions (223,912). Spot month October fell 1,965 positions (107,424) and December slipped 125 positions (57,588). Cash lean index for 8/21 is $50.01 down 0.70. DTN projected slaughter for Thursday is at 465,000 head. Saturday runs are expected at 218,000 head.

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


Rick Kment