DTN Before The Bell-Livestock

Market Stability Develops Wednesday

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

Early trade is posting mixed trade activity with cattle markets generally lower, while hog futures are mixed to mostly higher midweek. The potential to bring stability in cash hog values through the end of the month is helping to spark some additional underlying commercial support through the entire hog market. Corn prices are higher in light trade. Stock markets are mixed, Dow Jones is 10 points lower while Nasdaq is up 24 points.


Open: Steady to 50 cents lower. Limited pressure is slowly trickling into live cattle futures following the sharp move lower Tuesday. There still remains some uncertainty surrounding the ability to bring additional buyers back into the complex through the end of the month as traders are looking ahead to the Labor Day holiday weekend and potential for increased beef demand. Cattle futures continue to hold within the moderate but sideways trading range seen since early July. The inability to break out of this range in either direction could help to sustain market stability through most of the fall months. Cash cattle activity remains quiet with traders focusing on the very few cattle that sold in Iowa Tuesday afternoon. This posted prices at $168 to $170 per cwt, but this is not likely to be enough to get an accurate market test, and could lead to additional market direction through the end of the week. Bids are unavailable early Wednesday, with most asking prices still hard to pin down. Most trade is expected to be pushed off until sometime Thursday or Friday. Open interest Tuesday added 3,769 positions (300,262). Spot month August contracts lost 489 positions (1,481) and October contracts fell 560 positions (121,841). DTN projected slaughter for Wednesday is 120,000 head.


Open: 20 to 80 cents lower. Firm losses have redeveloped early Wednesday morning as traders continue to back away from the initial gains early in the week. September continue to be the most actively traded contracts, with losses of 72 cents per cwt early in the session. There will be some additional focus on overall live cattle direction, but the moves in the grain complex will heavily affect feeder cattle markets more than any other livestock market at this point. Cash index for 8/27 is listed at $150.60, down 0.04. Open interest Tuesday liquidated 1,110 positions (48,762).


Open: Mixed. Limited activity is seen early Wednesday morning with traders stepping back into the market following aggressive market shifts over the last couple of days. Most nearby contracts are holding firm gains, although the general market is mixed from 92 cents lower to 85 cents higher. The ability to sustain early buyer activity will be huge in sparking some additional support back into the market. Cash hog trade Wednesday is expected steady to $0.50 lower per cwt. Most bids are steady. Open interest Tuesday fell 3,153 positions (223,977). Spot-month October fell 4,384 positions (99,737) and December added 1,004 positions (59,854). Cash lean index for 8/27 is $47.09 down 0.70. DTN projected slaughter for Wednesday is at 468,000 head. Saturday runs are expected at 124,000 head.

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


Rick Kment