DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed trade are seen in most livestock futures with narrow trading ranges seen as traders try to balance short-term moves with longer-term direction through the upcoming weeks. This may leave markets sluggish over the near future with the focus on outside market direction. Corn markets are higher in light early trade Tuesday. Stock markets are mixed, Dow Jones is 40 points higher while Nasdaq is down 3 points.

LIVE CATTLE:

Open: Mixed. Traders are holding live cattle futures within a single digit trading range early Tuesday morning with limited direction developing across the complex. The strong market pressure seen Monday seems to have adequately adjusted market prices lower for expected supply levels over the next several months. Even though increased beef stocks were seen in the cold storage report. This news is falling on a deaf ear in the market as growing supply levels is not a shock for traders which have been focusing on this all summer. The potential for additional market shifts later in the day could spark some additional and wide market moves through the end of the session. Cash cattle activity remains at a standstill early Tuesday morning. The focus on moderate to strong shifts seen through early week trade may continue to delay any cash interest until midweek or later. There could be a couple token bids floated through the market during the day Tuesday, but likely these will not be taken serious until later in the week. Open interest Monday gained 1,784 positions (324,776). Spot month October contracts lost 2,932 positions (42,705) and December contracts added 1,427 positions (119,373). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Narrow trading ranges have developed through feeder cattle futures following the release of the latest cold storage report. A combination of short covering and follow through selling pressure after market shifts Monday has limited overall market direction through the entire complex. Currently feeder cattle futures are hovering from 10 cents lower to 10 cents higher, as the overall lack of direction in the market is keeping many traders out of the market for the time being. Cash index for 9/21 is listed at $157.30, up 1.01. Open interest Monday fell 363 positions (54,773).

LEAN HOGS:

Open: 50 cents to $1 higher. Early trade in lean hog futures has discounted the overall cold storage report during the first few minutes of market activity and focusing on the strong underlying cash market support and potential for traders to focus on upcoming demand rather than the amount of supply available. Total pork increases 1% from July levels and 6% ahead of year ago levels. The pork belly market posted the most aggressive market moves with product falling 14% from July levels, but gaining 82% from year ago levels. The concern of continually moving pork product continues to overshadow the industry, but this does not seem to be a major distraction to traders at this point. Cash hog trade Tuesday is expected steady to $1.50 higher. Most bids are $1 higher. Open interest Monday fell 307 positions (216,007). Spot month October fell 1,626 positions (29,926) and December slipped 1,546 positions (97,852). Cash lean index for 9/21 is $60.85 up 1.76. DTN projected slaughter for Tuesday is at 470,000 head. Saturday runs are currently estimated at 217,000 head.

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

(SK)

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