DTN Before The Bell-Livestock

Quiet Trade Seen in Livestock Markets

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

Mixed trade has redeveloped across the entire livestock complex with traders trying to not only adjust to previous market shifts, but focus on outside market activity. Trade volume remains extremely light, and will likely remain that way over the near future. Corn prices are lower in light trade. Stock markets are mixed, Dow Jones is 34 points higher while Nasdaq is down 22 points.

LIVE CATTLE:

Open: 10 to 50 cents higher. Limited short covering is slowly developing across the live cattle futures complex with traders looking for increased overall support through the entire market. The initial price boost seen early Wednesday morning could help to spark some additional underlying market interest across the complex. October futures remain 15 cents per cwt higher early Wednesday, as traders are attempting to bring a sense of market stability back into the complex following the light to moderate pressure seen across the market. Traders will continue to focus on most outside market factors through the day, rather than the direct impact in the cattle market, grain markets surrounding any USDA report shifts as well as many closely monitoring the impact to the East Coast of Hurricane Florence. This could keep prices shifting in a narrow to moderate range through the rest of the week. Cash cattle activity is starting out extremely sluggish once again with traders focusing on very limited interest early in the week. Asking prices have yet to been actively seen, which is expected to be the focus of many feedlot managers looking for additional direction from futures trade and the post USDA report market shifts. Packer interest is expected to improve through the day, but active trade is not expected until later in the week. Open interest Tuesday fell 2,890 positions (302,598). Spot month October contracts lost 7,047 positions (85,974) and December contracts lost 185 positions (89,218). DTN projected slaughter for Wednesday is 117,000 head.

FEEDER CATTLE:

Open: 30 to 40 cents higher. Limited buyer support is slowly stepping back into the market following the narrow to moderate losses seen in the complex Tuesday. The overall lack of support in the market continues to add some uncertainty to the entire market with traders focusing on potential market shifts through the upcoming days. Traders in feeder cattle markets will closely follow the grain market moves following the USDA reports as feeder cattle trade usually is most impacted by overall production costs associated with feed and grain prices. With expectations of a bearish report for the grain market, this is helping to spark some additional buyer interest into the cattle trade. Cash index for 9/10 is listed at $152.09, down 0.55. Open interest Tuesday added 267 positions (50,596).

LEAN HOGS:

Open: Mixed. Once again, lean hog futures continue to hold narrowly mixed trade with a combination of follow through selling pressure and short covering the main focus of initial trade. Prices are hovering in a narrow trading range with limited direction expected through most of the morning. The hog market continues to closely watch the impact and direction of Hurricane Florence, and producers and pork processors on the eastern seaboard have the potential to be heavily affected by this storm. Not only could it disrupt processing schedules, but there is no telling what long-term impact it will have on production facilities and hog farms in the path of the storm. Cash hog trade Tuesday is expected $1 to $2.50 higher. Most bids are $1.50 per cwt higher. Open interest Tuesday fell 4,804 positions (220,953). Spot month October fell 7,438 positions (65,817) and December added 2,267 positions (77,180). Cash lean index for 9/10 is $47.55 up 0.55. DTN projected slaughter for Wednesday is at 416,000 head. Saturday runs are expected at 154,000 head.

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

(SK)

Rick Kment