DTN Before The Bell-Livestock

Light Trade Keeps Prices Mixed

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

Light pressure is slowly trying to develop in cattle and hog futures early Tuesday morning. The market remains mixed to moderately lower, although narrow trading ranges have been seen in initial trade. This is a reaction to the sharp triple-digit gains that developed Monday. Corn prices are lower in light trade. Stock markets are higher, Dow Jones is 50 points higher while Nasdaq is up 15 points.

LIVE CATTLE:

Open: Steady to 45 cents lower. Light activity is seen Tuesday as traders are trying to square positions early in the session given the aggressive early-week move seen Monday. But it is uncertain just how much additional market direction will develop later in the morning, once traders become more active. At this point, most traders are hovering on the sidelines as they watch for additional direction in both outside markets and neighboring livestock markets. This may add some uncertainty to the direction over the rest of the week. Cash cattle interest remains quiet with bids and asking prices still undeveloped. It is expected that trade will not be seen until the last half of the week, although packer interest is likely to improve over the next couple of days. Open interest Monday added 251 positions (296,878). Spot month August contracts lost 534 positions (1,970) and October contracts fell 1,494 positions (122,406). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: 20 to 50 cents lower. Light pressure is slowly trickling into the feeder cattle futures complex with traders looking for additional market direction later in the morning. The strong gains seen Monday with most nearby contracts closing more than $3 per cwt higher has sparked some underlying support across the entire complex. This may add volatility to the market if buyer interest does not develop through the morning. Cash index for 8/24 is listed at $150.64, down 0.21. Open interest Monday added 110 positions (49,879).

LEAN HOGS:

Open: Mixed. Light trade is seen in all livestock trade with traders focusing on the strong gains seen late Monday. With prices early in the week holding triple-digit gains, the focus in most contracts at opening bell has been position taking. This has limited the overall direction of markets with most trade holding from 25 cents lower to 20 cents higher. But additional market movements may be seen as the morning progresses. Given the limit gains in nearby contracts Monday, trade has access to expanded trading limits, but at this point it does not appear this will be seen. Cash hog trade Tuesday is expected steady to $1 lower per cwt. Most bids are steady. Open interest Monday added 2,890 positions (227,130). Spot month October fell 1,224 positions (104,121) and December added 517 positions (58,850). Cash lean index for 8/24 is $47.79 down 1.14. DTN projected slaughter for Tuesday is at 468,000 head. Saturday runs are expected at 108,000 head.

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

(SK)

Rick Kment