DTN Before The Bell-Livestock

Livestock Prices Starting Red, U.S. Dollar Higher

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN photo by Nick Scalise)
GENERAL COMMENTS

LIVE CATTLE:

Open: 10 cents lower. December cattle are down 0.32 early in Thursday's session, actually holding fairly well in light of a U.S. dollar trading up 0.42 after Wednesday's rate hike from the Fed and after news that the U.S. and Japan were starting trade negotiations. Japan has bought one-third of U.S. beef exports so far in 2018 and traders have to be wondering if the trade talks will turn out as well as Mexico's did or as bad as China's currently are. Cash cattle are expected to be steady to $1 higher on Thursday, but have not seen much action yet. It was encouraging Wednesday to see bids inch up to $109 and $110. Wednesday's open interest increased 1,882 to 328,368. October contracts dropped 1,506 to 40,459 and December added 1,895 to 122,285. DTN projected cattle slaughter for Thursday at 119,000 head, up from 118,150 a year ago.

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FEEDER CATTLE:

Open: 2 cents higher. November feeder cattle are now down 0.10, off to a quiet start on Thursday and continuing to act well-supported. $160 per cwt remains two-year resistance on the weekly chart, but prices are not showing any significant weakness in the face of that resistance yet. 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 9/25 is listed at $158.04, up 4.96 from a week ago. Wednesday's total open interest increased 724 to 55,487.

LEAN HOGS:

Open: 42 cents lower. December hogs are down 1.02, showing bearish concern in the face of another quarterly hogs and pigs report, due out at 2 p.m. CDT. Pre-report estimates expect a little more than a 3% increase in all hogs and a 2.5% increase in the June-to-August pig crop. Thursday morning's weekly export sales were impressive at 28,300 mt for the week, thanks largely to Mexico. Japan is also a big customer for U.S. pork so traders will be watching the new trade talks carefully. December hog futures are showing signs of losing upward momentum, but much will depend on Thursday's new inventory numbers. The Lean Hog Index for 9/25 was estimated at $63.75 up $7.76 from a week ago. Cash hog trade is expected to be steady to $1.50 higher on Thursday. Wednesday's total open interest increased 583 to 217,712. Open interest in October dropped 2,113 contracts to 25,712 and December increased 1,787 contracts to 101,125. DTN projected hog slaughter for Thursday is at 472,000 head, up from 461,427 a year ago.

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

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Todd Hultman