DTN Before The Bell-Livestock

Mixed Trade Developing Early Wednesday

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

Livestock futures are holding mixed trade with narrow trading ranges as traders seem more focused on adjusting to previous market moves than setting a course for additional trade activity. This may add some additional volatility to the complex through the rest of the week. Corn markets are mixed in light early trade. Stock markets are higher, Dow Jones is 135 points higher while Nasdaq is up 39 points.

LIVE CATTLE:

Open: Mixed. Limited activity is seen through the live cattle complex with prices in December contracts holding at $115 per cwt through most of the morning. The moderate to strong gains seen late Tuesday is helping to spark some additional selling activity with traders trying to adjust positions. The current trading range is holding and not expected to be tested in the near future. This could allow prices to wander in a moderate range over the next few sessions. Cash cattle activity remains at a standstill Wednesday morning with bids and asking prices extremely limited and hard to pinpoint at this time. It is expected that packer interest will slowly develop over the day, but it is possible that active trade will not be seen until the end of the week. With the holiday next week, it is likely that both sides will become more aggressive to get business done through the end of the week in order to secure needed numbers over the next couple of weeks. Open interest Tuesday gained 2,931 positions (338,150). Spot month December contracts lost 5,694 positions (67,921) and February contracts added 5,201 positions (109,949). DTN projected slaughter for Wednesday is 119,000 head.

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FEEDER CATTLE:

Open: Mixed. Initial mixed trade moving into the complex at opening bell is eroding through the first few minutes of trade as traders move away from follow through buying and focus on position taking opportunities. It is expected that losses through the morning will remain light, as traders try to adjust positions following sharp late-day gains seen in the feeder cattle complex on Tuesday. The gains Tuesday seem to be based more on market emotion and late day market shifts, so it is not unlikely that additional market volatility will be seen over the next couple of days in order to get traders comfortable with the current trade range. Cash index for 11/12 is listed at $149.89, down 0.70. Open interest Tuesday fell 450 positions (49,127).

LEAN HOGS:

Open: Steady to 50 cents lower. Following mixed trade Tuesday, the overall lack of direction in the lean hog complex continues with narrow price pressure slowly developing across nearby contracts. This is pushing nearby contracts 10 to 20 cents per cwt lower as traders focus on the overall lack of support in cash and pork values through the week. The potential that price moves will remain narrow through most of the session is currently limiting overall trade volume in the hog market and could lead to lackluster interest, and possible light gains through the rest of the morning. Cash hog trade Wednesday is expected steady to $2 lower. Most bids are seen $1 per cwt lower. Open interest added 5,455 positions (241,066). Spot month December slipped 4,353 positions (55,802) and February added 6,187 positions (79,445). Cash lean index for 11/12 is $61.20 down 0.67. DTN projected slaughter for Wednesday is at 477,000 head. Saturday runs are expected to be seen at 278,000 head.

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

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Rick Kment