DTN Before The Bell Livestock

GENERAL COMMENTS:

Livestock markets remain generally quiet Wednesday morning with prices mixed in a narrow to moderate range. Following the active price moves in cattle futures Tuesday, it seems that traders are taking a back seat to further market shifts as they focus on outside market moves and more information coming out of cash and wholesale meat markets. This could quickly add uncertainty to cattle markets during early September as traders focus on defending early month lows, but have legitimate concerns about the direction of beef demand within the upcoming weeks. Corn is trading lower in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 429 points higher with NASDAQ up 206 points.

LIVE CATTLE:

Open: Mixed. Live cattle futures have continued to shift higher and lower through the morning, as traders seem to be establishing a more stable trading range. The fact that prices have been able to hold well above last week's lows is creating some moderate encouragement through the complex, although the potential for sizable gains remains limited by growing concerns of beef demand growth through the next couple of months and current supply levels of cattle available to packers. Cash cattle markets are quiet with bids still undeveloped and may remain unavailable through most of the day Wednesday. A few scattered asking prices are seen at $105 in the South, although it has been hard to pin down asking prices in the North at this point. Most trade is likely to be delayed until late Wednesday or most likely sometime Thursday, as both sides are closely watching beef values and moves in outside markets. Open interest fell 1,362 positions (292,110). October contracts lost 7,108 positions (90,879) and December contracts added 4,388 positions (82,627). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Feeder cattle futures are trading on either side of unchanged Wednesday morning with nearby gains being offset by light to moderate pressure in deferred contracts. The sizable premiums seen in the market just a few weeks ago have significantly eroded with nearby and deferred contracts trading within a $2 per price window. This continues to put less emphasis on long-term market support, as the uncertainty of fall placements on price levels will continue to cause moderate price shifts through the upcoming weeks. Cash index for 9/4 is $139.05, down 1.15. Open interest Tuesday fell 465 positions (42,042).

LEAN HOGS:

Open: Mixed. October lean hog futures continue to flirt with $60 hog prices with prices hovering just below this threshold during light morning trade. The potential to move above this price point seems likely, but the question if prices will be able to close above these levels is much more uncertain. Nearby futures are trading within a mixed trading range from 10 cents lower to 15 cents higher, giving very little indication that a breakout market move will be seen anytime soon. Traders are closely focusing on outside market moves as well as potential further support in pork cutout values later in the morning. This may add increased underlying support to the entire complex, although it is uncertain if strong gains will develop midweek. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady to 50 cents higher. Open interest fell 1,760 positions (219,459). October slipped 7,501 positions (77,291) and December added 4,468 positions (69,768). Cash lean index for 9/4 is $60.53, up 1.89. DTN projected slaughter for Wednesday is 485,000 head. Saturday runs are expected near 410,000 head.

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

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