DTN Before The Bell Livestock

GENERAL COMMENTS:

Cattle trade has slowed to a crawl Wednesday morning with prices unable to hold recent support levels. The underlying pressure in the complex is partly due to market inactivity, but concerns of post-Labor Day pressure has also weakened the market structure. Corn is trading lower in light to moderate trade. Stock markets are mixed in limited morning trade. Dow Jones is 128 points higher with NASDAQ down 11 points.

LIVE CATTLE:

Open: Steady to $1 lower. Firm pressure in nearby live cattle trade Wednesday morning is setting the tone for the entire complex. Overall light trade activity may continue to accelerate selling pressure Wednesday as traders seem less focused on stepping into the market and more focused on outside market direction. Cash cattle activity remains quiet midweek with bids unavailable so far this morning. The weaker market moves seen Tuesday could hamper a sense of support in the market through the rest of the week as both sides focus on wrapping up earlier than later before the long weekend break. Asking prices are seen at $105 live and $165 dressed, but it will be interesting how aggressively feeders hold to these price levels if futures trade continue to erode lower through the week. Open interest added 518 positions (296,247). October contracts lost 3,618 positions (112,940) and December contracts added 1,712 positions (72,189). DTN projected slaughter for Wednesday is 120,000 head.

FEEDER CATTLE:

Open: Steady to $1 lower. Early trade in feeder cattle futures remains inconsistent with prices hovering in a wide but weaker market range during initial trade. The fact that prices were unable to hold previous gains is slightly concerning, but the expected lack of market activity and seasonal price pressure typically seen in the market could add further pressure through the month of September. Even though the pullback in the market was expected, it doesn't make it any easier or less dramatic for producers or the industry in general. Cash index for 8/31 is $140.52, down 0.43. Open interest Tuesday added 178 positions (43,417).

LEAN HOGS:

Open: Mixed. Lackluster market movements are developing Wednesday morning with narrow to moderate gains seen in nearby futures, while the rest of the complex is taking an opportunity to square positions following Tuesday's price bounce higher. The overall lack of direction in the market is very evident Wednesday morning, and likely to continue through the end of the week. Traders are looking for direction from the cash hog market and pork values, but it is still questionable if this will be able to spark active interest in nearby contracts at this point. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady to 50 cents higher. Open interest added 2,466 positions (215,948). October slipped 1,407 positions (92,482) and December added 2,700 positions (58,578). Cash lean index for 8/31 is $56.80, up 0.20. DTN projected slaughter for Wednesday is 484,000 head. Saturday runs are expected at 108,000 head.

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

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