DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong underlying pressure is quickly sweeping through the entire livestock complex with triple-digit losses seen in feeder cattle trade. The overall lack of support is allowing for increased pressure to develop in live cattle and lean hog markets also as traders focus on quickly pulling back from recent market support. Corn markets are lower in light early trade. Stock markets are lower. Dow Jones is 265 points lower with Nasdaq down 89 points.

LIVE CATTLE:

Open: 50 cents to $1 lower. Firm pressure is quickly moving into live cattle trade. The initial attempts to bring a sense of stability into the cattle market early Monday morning was quickly dashed, allowing increased overall pressure to be seen in all markets as traders not only follow the renewed pressure in feeder cattle markets, but have become increasingly focused on underlying pressure developing in commercial live cattle trade. This could create increased pressure through most of the morning, although traders still seem well entrenched in the top end of the sideways moving market seen through the summer and fall months. Cash cattle activity remains quiet with bids and asking prices undeveloped and likely to remain that way until midweek or later. Following steady to firm price levels that developed late last week, feeders are likely to focus on additional market support going into the end of the month and upcoming holiday season which will limit overall procurement levels. Open interest Friday added 1,129 positions (347,111). Spot month December contracts lost 1,550 positions (8,887) and February contracts added 214 positions (135,106). DTN projected slaughter for Monday is 118,000 head.

FEEDER CATTLE:

Open: $1 to $1.50 lower. Moderate to strong pressure is developing in feeder cattle trade as traders not only focus on uncertainty in beef price direction, but the overall cost of production and long term demand moves for all meat products continues to spark early week anxiety through the cattle market. Feeder cattle futures are leading the market lower, with prices focusing on lack of underlying support through trading session. Cash index for 12/13 is listed at $146.90 up $0.50. Open interest Friday fell 126 positions (49,486).

LEAN HOGS:

Open: 20 to 80 cents lower. Limited trade volume is developing early Monday morning with traders focusing on additional follow-through market support. The pressure in front month February futures is now leading the complex lower and focusing on the potential for additional longer term weakness that could slowly develop through the rest of the session. This may add some increased uncertainty through the entire hog market during the last full week of trade in 2018. Cash hog trade is steady to $1.00 lower. Most bids are steady. Open interest fell 2,156 positions (210,458). December fell 268 positions (12,226) and February lost 1,963 positions (76,727). Cash lean index for 12/13 is $55.17 down 0.19. DTN projected slaughter for Monday is at 477,000 head.

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

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