DTN Before The Bell-Livestock

Mixed Cattle Trade Stabilize Markets

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

Cattle futures are mixed in light trade with current trading ranges limited to narrow moves based on a combination of follow-through pressure and short covering trying to establish a sense of market stability Tuesday. Hog futures continue to erode with prices 30 to 60 cents per cwt lower in light to moderate activity. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 316 points higher with Nasdaq up 81 points.

LIVE CATTLE:

Open: Mixed. Early live cattle trade is struggling to find direction Tuesday morning with prices hovering from 10 cents lower to 20 cents higher in the early minutes of trade activity. A combination of follow-through selling pressure is being met by short covering stepping into the market following firm early week pressure. Limited activity is expected to be seen in all markets through the morning with traders focusing on potential beef value direction and outside market shifts. Cash cattle interest remains at a standstill with traders focusing on the overall lack of bids and asking prices in all areas. The focus on market pressure in futures trade Monday may add additional apathy to the entire complex with traders focusing on the potential that active trade could not be seen until sometime Friday. The fact that show lists are smaller going into the end of the year is not surprising, but it could allow additional incentive for packers to become more aggressive. Open interest Monday fell 431 positions (346,199). Spot month December contracts lost 1,384 positions (7,503) and February contracts slipped 365 positions (134,403). DTN projected slaughter for Tuesday is 119,000 head.

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FEEDER CATTLE:

Open: Mixed. Early trade is mixed in a narrow range following the sharp triple-digit losses that quickly developed through the complex Monday. This may add some additional price stability Tuesday, although trade volume is expected to remain light through most of the morning. Cash index for 12/14 is listed at $146.20 down $0.70. Open interest Monday fell 186 positions (49,281).

LEAN HOGS:

Open: 30 to 60 cents lower. Firm pressure has redeveloped through lean hog futures with nearby contracts holding losses of 50 to 60 cents per cwt with increased market pressure developing across the entire complex. There is growing uncertainty about the ability to bring support back into the market before the end of the year. Over that last 10 days, front month February futures have shaved $4 per cwt off of market prices, pulling back from the most recent market support which held over the last month. With February futures trading at $63 per cwt, follow through liquidation continues to be seen, allowing for moderately weak buyer activity despite the firmness in pork values. Cash hog trade is steady to $1.00 lower. Most bids are 50 cents to $1 lower. Open interest added 759 positions (211,168). February added 609 positions (77,331) and April lost 326 positions (46,712). Cash lean index for 12/14 is $55.13 down 0.04. DTN projected slaughter for Tuesday is at 477,000 head. Saturday runs are expected near 353,000 head.

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

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Rick Kment