DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm pressure has swept through the entire livestock complex early Tuesday morning with firm losses seen in cattle and hog trade. Initial lack of trade volume may add to the overall weakness seen in the complex during the rest of the session. Corn markets are higher in light early trade. Stock markets are mixed, Dow Jones is 124 points lower while Nasdaq is up 9 points.

LIVE CATTLE:

Open: 10 to 50 cents lower. Initial price shifts moved markets lower as nearby contracts are holding 20 to 30 cent losses, while deferred contracts are becoming more aggressive in the opening minutes of trade. This pullback in all contracts is countering the late day gains seen Monday. Trade volume is expected to remain sluggish during the entire morning, with potential stability developing later in the day. Cash cattle activity remains at a standstill with bids and asking prices undeveloped. It is likely to be midweek before interest is shown, with active trade seen in the last half of the week. Open interest Monday fell 130 positions (338,211). Spot month October contracts lost 3,053 positions (18,339) and December contracts slipped 615 positions (128,498). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: 30 to 70 cents lower. Firm pressure is once again moving through the complex. Limited support late Monday is allowing for early morning pressure as traders pull back from previous gains. This may allow markets to hover in a moderate trading range through early week with additional uncertainty developing across the entire complex. The recent firm tone in the market is likely to help limit widespread pressure, but may not eliminate losses. Cash index for 10/5 is listed at $158.15, down 0.03. Open interest Monday slipped 1,353 positions (57,061).

LEAN HOGS:

Open: 50 cents to $1.30 lower. Firm pressure has trickled into the lean hog futures complex early Tuesday morning. This overall lack of support may continue to erode additional buyer support seen late last week. As additional volume moves into the complex, it will become more evident, just how much additional pressure may develop. At this point, prices could move significantly lower without breaking out of the sideways trading range, creating additional volatility in the complex. Cash hog trade Tuesday is expected steady to $1 lower. Most bids are steady. Open interest Monday added 920 positions (229,749). Spot month October fell 492 positions (14,491) and December slipped 855 positions (103,335). Cash lean index for 10/5 is $69.36 up 0.05. DTN projected slaughter for Tuesday is at 471,000 head. Early Saturday runs are expected near 173,000 head.

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

(SK)

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