DTN Before The Bell-Livestock

Mixed Prices Limit Volume

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

Mixed trade has developed through most livestock trade early Wednesday morning with follow through support developing in feeder cattle trade. This shift higher in feeder cattle markets is helping to bring some stability to front month live cattle markets, although outside market shifts have eroded follow through support in the live cattle complex. Hog futures are mixed in a narrow range with a combination of short covering and follow through selling trickling into the market. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 265 points higher with Nasdaq up 88 points.

LIVE CATTLE:

Open: Mixed. Early live cattle trade is mixed in a narrow range following the firmness in feeder cattle trade while moderate outside market gains are starting to develop. Traders are looking for increased overall support through the entire market, but the choppy shifts in beef values through the last week has created limited aggressive market movement through the entire live cattle market. Narrow losses of 20 to 30 cents per cwt are seen in early 2019 contract months, which may add some underlying softness to the complex through the rest of the session. Cash cattle interest remains undeveloped with bids still quiet early Wednesday. It is expected that packer interest will improve somewhat through the day, but this is still not expected to create significant trade activity until later in the week. Asking prices are seen from $121 to $122 live and $190 dressed. Open interest Tuesday added 2,890 positions (340,176). Spot month December contracts lost 1,026 positions (12,078) and February contracts fell 1,082 positions (135,926). DTN projected slaughter for Wednesday is 119,000 head.

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FEEDER CATTLE:

Open: Mixed. The underlying tone of the feeder cattle complex remains firm following strong triple-digit gains seen Tuesday. But initial trade has shown a combination of follow through buying as well as light pressure due to position taking. It is expected that the initial softness in the market will quickly be dispelled through the morning with traders gaining additional momentum through the last half of the week. Nearby contracts continue to be well entrenched in the sideways market trend, with current prices still nearly $2 per cwt below resistance levels. The focus on potential longer term demand is keeping prices supported in a moderate trading range early Wednesday morning. Cash index for 12/10 is listed at $144.96 up $0.96. Open interest Tuesday fell 239 positions (49,241).

LEAN HOGS:

Open: Mixed. Light gains have slowly developed in front-month December trade as well as late deferred contracts, but the overall tone of the market remains weak given the pressure in nearby contracts Tuesday. February futures are lightly traded in the opening minutes of activity with losses of 30 cents per cwt holding at opening bell. This may create some additional early morning pressure although, recent losses and limited additional direction in the market is likely to limit follow through losses and bring about some light buyer activity midweek. Cash hog trade is steady to $1.00 lower. Most bids are steady to 50 cents lower. Open interest added 61 positions (210,079). Spot month December fell 1,094 positions (13,758) and February slipped 175 positions (78,021). Cash lean index for 12/10 is $55.98 down 0.14. DTN projected slaughter for Wednesday is at 477,000 head. Saturday runs are expected at 225,000 head.

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

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Rick Kment