DTN Before The Bell-Livestock

GENERAL COMMENTS

Early Friday, December cattle and hogs were both modestly lower, falling back from early attempts to trade higher on the open. Friday tends to be a nervous day for cattle, typically the time when buyers and sellers finally come together. This Friday also has USDA's on-feed report due out at 2 p.m. CDT, expected to show another month of comfortable inventories. Most major stock markets are higher and Dow Jones is up 73 points.

LIVE CATTLE:

Open: 25 cents higher.

December cattle tried a higher open, but fell back quickly, finding resistance near its highest prices this year. At 2 p.m. CDT, USDA will release its monthly Cattle on Feed report. The Sept. 1 inventory is expected to be up 5.3% from a year ago, similar to previous reports. August placements are expected up 4%, while marketings should be even with a year ago. This year's on-feed reports haven't had much price impact, but they continue to suggest that available supplies have been comfortable enough to handle this year's demand. Cash cattle saw light trade in Nebraska and Iowa at $175 Thursday, but more is likely waiting for the release of USDA's on-feed report at 2 p.m. CDT Friday. Thursday's open interest increased 1,904 to 322,694. Spot-month October contracts dropped 4,001 to 49,375, and December added 3,995 to 116,122. DTN projected cattle slaughter for Friday at 118,000 head, up from 115,104 a year ago.

FEEDER CATTLE:

Open: 52 cents higher.

October feeder cattle are up $0.22, off to a quiet start on Friday and continuing to act well-supported. $160 per cwt continues to hold as two-year resistance on the weekly chart, but last week's breakout is still holding firm, and we have to wonder if available feeder supplies are tighter than expected. Overall, cattle and feeder prices continue to find support from increased beef demand and a positive outlook for the economy, in spite of this year's trade concerns. The Feeder Cash index for 9/19 is listed at $154.46, up $1.68 from a week ago. Thursday's open interest increased 412 to 54,663.

LEAN HOGS:

Open: 25 cents higher.

December hogs also fell back from a high attempt at the open and may be stalling out near their highest prices in three months. Likewise, the October contract is encountering resistance at $62. The six-week rally from their August lows has been impressive, but with hog numbers available, it is fair to wonder just how much buying is left in the tank. The best news for hog prices lately has been the pickup in retail prices, which continues, so far. The Lean Hog Index is estimated at $57.44 on 9/19, up over $7 from a week ago. Cash hog trade in expected to be steady to $1 higher on Friday. Thursday's open interest increased 137 to 216,879. Spot-month October dropped 2,149 contracts to 32,822 and December increased 1,489 contracts to 98,920. Cash lean index for 9/19 is estimated at $57.44 up $1.45. DTN projected hog slaughter for Friday is at 442,000 head, down from 450,164 a year ago.

Todd Hultman can be reached at Todd.Hultman@dtn.com

(SK)

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