DTN Before The Bell Livestock

GENERAL COMMENTS:

Trade is light early Wednesday morning with narrowly mixed trade in live cattle and lean hog futures. Morning focus seems to be based on position squaring after Tuesday's rally. This could leave prices wandering in a narrow range over much of the session. Corn remains lower in light to moderate trade. Stock markets are mixed in limited morning trade. Dow Jones is 11 points lower with NASDAQ up 59 points.

LIVE CATTLE:

Open: Mixed. Narrow trading ranges are seen in live cattle futures. The overall lack of support in the complex continues to focus on finding a good market balance given the volatility over the last week. Firming boxed beef values are expected to keep prices within the current range, although the focus on potential cash market pressure and uncertain fall demand could start to allow for more bearish market direction over the next couple of weeks. Cash cattle markets are quiet Wednesday morning, although the overall tone of the market is expected to develop over the next two days with packers showing more interest in the near future. The limited Southern trade seen early in the week could limit price optimism, but feeders still point to higher beef values, as asking prices remain elevated. Open interest gained 1,284 positions (295,992). August contracts lost 581 positions (2,311) and October contracts slipped 607 positions (123,670). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Open: Steady to 50 cents higher. Firm gains have redeveloped Wednesday morning with traders focusing on the potential to regain early-week losses. Although the focus on increased placements still has traders well off of recent market highs, the concern that this will add sharp additional losses seems to be fading. Seasonal pressure is expected to become much more of a factor over the coming weeks than higher than expected July placements. But traders seem to be focused on the ability to regain as much stability as possible before further losses are seen through the fall months. Cash index for 8/24 is $143.62, down 0.42. Open interest Tuesday fell 162 positions (46,300).

LEAN HOGS:

Open: Steady to 50 cents lower. Narrow losses are seen in all nearby lean hog contracts as traders quickly back away from the triple digit rally seen Tuesday. Little has changed in the last day either technically or fundamentally, but traders are focused on squaring positions after setting new short-term highs. The downward pressure is not expected to gain much additional attention, but limited volume could keep prices steady to lower through most of the morning. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady to 50 cents higher. Open interest added 841 positions (217,497). October slipped 645 positions (99,478) and December added 1,011 positions (53,950). Cash lean index for 8/21 is $56.06, up 0.55. DTN projected slaughter for Wednesday is 485,000 head. Saturday runs are expected at 277,000 head.

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

(c) Copyright 2020 DTN, LLC. All rights reserved.