DTN Before The Bell-Livestock

GENERAL COMMENTS

Hog futures have steadily pulled back from strong triple-digit gains seen Thursday. The optimism that was seen in the market seems to have been tempered by the uncertainty ahead of talks and negotiations during the G20 Summit this weekend. Cattle markets are on the other end of the spectrum, as buyer support has slowly developed following the previous market pullback. Corn markets are higher in light early trade. Stock markets are lower, Dow Jones is 52 points lower Nasdaq is down 17 points.

LIVE CATTLE:

Open: 40 to 70 cents higher. Firm buyer support has quickly and steadily moved into the live cattle complex early Friday morning. Losses seen Thursday were based primarily on wide ranging losses in feeder cattle trade has been offset by end of the week and month buying quickly and aggressively moving into the complex. Nearby contracts are leading the market higher with gains of 70 cents per cwt seen in the opening minutes of trade. Although trade ranges are expected to remain range bound due to the wide sideways trend in the complex, the concern that beef demand may struggle through early 2019 is being overshadowed by optimism ahead of the G20 Summit. The hope that additional market headway will be seen during talks over the weekend is helping to spark some cautious, but supportive market buying early Friday morning. Cash cattle activity is still light with just a few bids resurfacing in Nebraska at $183 dressed basis. This is likely to quickly change through the last half of the day, as packer interest is likely to improve significantly in all areas over the next few hours. Asking prices are holding at $120 live and $187 and higher dressed. It is possible that active trade could be pushed into late in the afternoon, but both sides are intent on getting some business done before the end of the day. Open interest Thursday fell 4,258 positions (340,788). Spot month December contracts lost 3,531 positions (31,014) and February contracts slipped 518 positions (135,524). DTN projected slaughter for Friday is 118,000 head.

FEEDER CATTLE:

Open: 30 to 60 cents higher. Extremely light trade volume is seen through the entire feeder cattle complex early Friday morning as traders focus on short covering activity following the strong triple digit losses seen Thursday. The overall light trade seen through the entire feeder cattle complex through the end of the week has allowed for traders to adjust market prices in a wide range with very limited market direction expected over the end of the week due to the wide sideways trading range that the market is currently contained in. Trade volume is expected to remain limited through the entire session, although this could allow for some wider late day market shifts based more on outside market moves that cattle market fundamentals. Cash index for 11/28 is listed at $147.47, down $0.44. Open interest Thursday fell 359 positions (48,585).

LEAN HOGS:

Open: 10 to 40 cents lower. End-of-week and -month positioning are starting to develop in lean hog trade with contracts slowly eroding from the strong triple digit gains seen Thursday. Although there still seems to be some underlying support in lean hog trade going into the G20 Summit and hope that additional pork buying will be seen from the Chinese market, the focus on adjusting positions at the end of November is taking precedent through morning activity. Cash hog trade Friday is steady to $1.00 lower. Most bids are seen steady. Open interest fell 2,810 positions (222,468). Spot month December fell 3,073 positions (28,794) and February added 393 positions (78,693). Cash lean index for 11/28 is $56.56 down 0.28. DTN projected slaughter for Friday is at 470,000 head. Saturday runs are expected at 207,000 head.

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

(BAS)

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