DTN Before The Bell-Livestock

Hog Markets Firm Early Tuesday

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Livestock trade remains mixed in a limited market direction following aggressive triple-digit gains that helped to rekindle support Monday. The early pressure in cattle trade is being focused on lack of early volume, while follow-through gains are developing in a steady pattern through the hog complex. Corn markets are steady in light early trade. Stock markets are lower, Dow Jones is 325 points lower while Nasdaq is down 127 points.

LIVE CATTLE:

Open: 50 cents to $1.10 lower. Initial trade is slowly but steadily pulling away from strong gains which developed Monday. The ability to hold triple-digit gains late Monday in all contracts except October futures is now allowing for initial market pressure based on overall lack of volume and market adjustments being done. Very little of the pressure Tuesday is focused on any fundamental or technical market shifts, as traders are expected to jockey for positions over the next few days as prices wander in a sideways range. Cash cattle markets remain at a standstill with bids and asking prices undeveloped at this point. Active trade is likely to be pushed to the end of the week with bids possible to not be seen until midweek. Open interest Monday gained 1,685 positions (331,064). Spot month October contracts lost 1,085 positions (4,268) and December contracts fell 730 positions (121,407). DTN projected slaughter for Tuesday is 118,000 head.

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FEEDER CATTLE:

Open: 40 to 90 cents lower. Early morning position taking is steadily moving into feeder cattle trade. The reaction to sharp triple digit gains seen Monday is helping to stimulate additional selling pressure in the opening minutes of trade. The market remains oversold given the $8 per cwt tumble in early 2019 contracts over the last couple of weeks. But traders are not expected to regaining all of this market support back with the current focus on establishing a strong sideways trend over the next couple of weeks. Outside market direction will play a significant role in the overall direction of feeder cattle markets. Cash index for 10/19 is listed at $155.27, down 0.09. Open interest Monday fell 745 positions (53,401).

LEAN HOGS:

Open: 20 to 50 cents higher. Firm follow-through buyer support is moving into the lean hog complex with increased buyer activity developing across the complex. This has helped to pull front-month December contracts over $2 per cwt above short market lows set last week. The ability to rekindle stable buyer support in nearby and deferred contracts could help to bring about increased market support through the end of October. Cash hog trade Tuesday is expected steady to $2 lower. Most bids are $1 lower. Open interest fell 1,686 positions (220,838). Spot month December slipped 1,700 positions (99,214) and February added 50 positions (43,454). Cash lean index for 10/19 is $66.43 down 0.79. DTN projected slaughter for Tuesday is at 475,000 head. Early Saturday runs are expected at 192,000 head.

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

(SK)

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Rick Kment