DTN Before The Bell-Livestock

Livestock Futures Inch Lower

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

Light to moderate pressure is seen in livestock futures with very limited direction seen across the complex. Lean hog markets continue to lead the complex lower, although trade volume remains sluggish, with very little indication that long term market shifts will develop. Corn prices are lower in light trade. Stock markets are mixed, Dow Jones is 39 points lower while Nasdaq is up 8 points.


Open: Steady to 50 cents lower. Moderate pressure is slowly developing in live cattle trade with most contracts hovering between 30 and 50 cent losses early Tuesday. The narrow trading range seen through the week so far has helped to keep markets stable, but traders are also focusing on the potential that additional market volatility may develop through the week. The complex remains stuck in a wide sideways market trend, which essentially is likely to eliminate a wide market shift without a major disruption on either side. But given the bookmarks set in August, prices are essentially able to hover within a $6 per cwt trading range without evidence of technical or fundamental market changes. The most recent short-term trend is still holding within a $2 per cwt range, which has held over the last three weeks. All of these market moves have set up lackluster market direction, while still allowing prices to shift within a moderate trading range. Cash cattle markets are undeveloped early Monday morning following light to moderate trade that developed through the day Friday. With prices seen steady to firm late last week, both sides will reassess market needs. The morning is expected to be filled with show list distribution and inventory taking with bids and asking prices not likely to be seen until near midweek. Open interest Monday added 1,318 positions (305,965). Spot month October contracts lost 7,960 positions (93,408) and December contracts added 3,686 positions (89,602). DTN projected slaughter for Tuesday is 119,000 head.


Open: Mixed. The direction of feeder cattle markets are unsettled with prices mixed to mostly lower early Tuesday morning. There is some additional focus on the pull lower in front month futures Monday. This is allowing for follow through pressure to quickly develop across the complex with traders looking for increased market activity in several markets. All remaining 2018 contracts are priced within a very tight trading range of 12 cents per cwt. This lack of premium or discount in the market is causing some underlying concerns and may limit additional trade activity due to the consistency of market prices through the end of the year. Cash index for 9/7 is listed at $152.64, up 1.32. Open interest Monday added 391 positions (50,329).


Open: Mixed. Initial trade is seen in a narrow range early Tuesday morning as traders focusing on the underlying support developing in cash hog trade, while traders continue to find a challenge when sparking additional buyer support. If price ranges are unable to break through short-term gains seen last week, prices may start to establish a narrower trading range through the upcoming weeks heading into the fall and winter months. Cash hog trade Tuesday is expected $1 to $3 higher. Most bids are $1 to $2 per cwt higher. Open interest Monday fell 4,755 positions (225,763). Spot month October fell 9,940 positions (73,258) and December added 2,661 positions (74,913). Cash lean index for 9/7 is $47.00 up 0.91. DTN projected slaughter for Tuesday is at 470,000 head. Saturday runs are expected at 152,000 head.

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


Rick Kment