DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong market gains have flooded into lean hog futures with triple-digit gains seen in nearby contracts while October futures are leading the market higher with a $2.37 per cwt rally. Cattle trade remains weaker in limited activity. Corn markets are lower in light early trade Tuesday. Stock markets are higher, Dow Jones is 81 points higher, while Nasdaq is up 43 points.

LIVE CATTLE:

Open: 10 to 50 cents lower. Light early morning pressure has trickled into the live cattle complex with narrow market shifts. The lack of direction in the market is impacting summer 2019 contracts with the greatest intensity as traders are chipping away at the price premium seen in the April and June futures prices. Narrow trading ranges are expected to continue through most of Tuesday morning, although an underlying firm market tone exists, which could allow for higher prices later in the session. Cash cattle markets remain sluggish with limited interest seen at this time from either side. Bids and asking prices are not likely to be prominent until midweek. Open interest Monday gained 5,248 positions (315,362). Spot month October contracts lost 8,325 positions (58,517) and December contracts added 6,713 positions (107,295). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Initial prices were mixed to mostly lower early Tuesday morning, although the market quickly eroded further in the first few minutes of trade. This is holding September feeder cattle futures 80 cents per cwt lower with increased pressure likely to trickle into the market through the rest of the morning. Traders are focusing on recent market support setting contract highs over the last few day. This may bring some position taking back into the market as traders focus on potential market shifts through the next several days. Cash index for 9/14 is listed at $153.38, up 0.67. Open interest Monday added 238 positions (52,685).

LEAN HOGS:

Open: 20 cents to $2 higher. Extremely wide market shifts are seen through the lean hog futures at opening bell Tuesday. Front month October futures have regained most of the pressure seen early in the week with a $2 per cwt rally, although deferred contracts seem to be less confident about any widespread buyer support moving back into the market. Deferred futures are holding narrow gains of 20 to 40 cents per cwt as traders determine just how much buyer support may move back into the complex. The aggressive liquidation of open interest Monday may allow for traders to step back into the market once prices have shifted lower early in the week. This may bring some underlying support back to the market, but for now traders need to determine just how much trade will develop through the rest of the morning. Cash hog trade Tuesday is expected steady to $2.50 higher. Most bids are $1.50 Higher. Open interest Monday liquidated 8,209 positions (218,973). Spot month October fell 7,651 positions (39,219) and December fell 932 positions (96,128). Cash lean index for 9/14 is $53.48 up 1.63. DTN projected slaughter for Tuesday is at 420,000 head. Early Saturday estimates are seen at 179,000 head.

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

(SK)

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