DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures are struggling to find support early Monday morning with traders focusing on additional market direction and the adjustments likely to develop through the entire day following sharp gains late last week. Corn markets are lower in light early trade Friday. Stock markets are lower, Dow Jones is 11 points lower, while Nasdaq is down 43 points.

LIVE CATTLE:

Open: 10 to 50 cents lower. Initial pressure is trickling into the lightly traded feeder cattle complex early Monday morning. Following a Friday rally that left October futures locked in limit gains at the closing bell has sparked expanded trading limits through the day. As seen in several previous situations when livestock futures post limit moves and expand trading limits, the returning interest seems to be lackluster at best and unwilling or able to show much movement. As more volume moves back into the complex, live cattle futures are expected to become more defined, which could lead to wider trading ranges through the last half of the session. Cash cattle activity is undeveloped following the limited and late activity last week. Monday morning is expected to be filled with show list distribution and inventory taking, with interest not expected until later in the week. Open interest Friday gained 7,494 positions (310,349). Spot month October contracts lost 3,974 positions (66,850) and December contracts added 5,319 positions (100,764). DTN projected slaughter for Monday is 119,000 head.

FEEDER CATTLE:

Open: 40 to 60 cents lower. Early position taking has slowly entered the feeder cattle complex. Traders are still trying to adjust to the aggressive market surge seen Friday. With prices breaking through short-term resistance levels, the focus on continued buyer interest moving into the market is helping spark some additional buyer activity. Limited trade is expected through most of the morning, although early losses may be short lived as follow through buying may step back into the complex later in the session. Cash index for 9/13 is listed at $152.71, up 0.11. Open interest Friday added 1,224 positions (52,478).

LEAN HOGS:

Open: 40 to 60 cents lower. Firm pressure has moved through lean hog futures with traders looking for increased overall support. This is likely to spark some additional market support as the inability to break through last week highs could establish more aggressive resistance through the entire complex. The most aggressive pressure appears to be developing in December and February contracts as traders focus on pressure through the end of the year. Cash hog trade Monday is expected $1 lower to $1.50 higher. Most bids are steady. Open interest Friday gained 508 positions (227,186). Spot month October fell 5,864 positions (46,870) and December added 5,682 positions (97,060). Cash lean index for 9/13 is $51.85 up 1.77. DTN projected slaughter for Monday is at 415,000 head.

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

(SK)

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