DTN Before The Bell Livestock

GENERAL COMMENTS:

Lean hog futures are mixed in a narrow trading range as traders remain generally bullish, but the opportunity to adjust positions following the aggressive market rally is causing markets to stabilize. Cattle futures are showing significant buyer support as traders continue to focus on triple-digit gains in live cattle and feeder cattle trade. Corn is trading mixed in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 325 points higher with NASDAQ up 225 points.

LIVE CATTLE:

Open: Steady to $1.50 higher. Moderate gains have quickly but steadily developed in all live cattle futures with nearby futures posting the most aggressive market support. Traders will closely focus on the ability for boxed beef values to stabilize early in the week, helping to indicate that longer-term price support appears to be building in the complex. The focus on defending recent short term support levels will likely help to add even more momentum to the market over the next few days. Cash markets are quiet with show list distribution and inventory taking likely to be extent of business through most of the day Monday. Active trade is likely to be delayed until midweek or later, which could limit cash market activity and asking prices from being seen in the near future. Open interest added 3,743 positions (290,744). October contracts lost 8,935 positions (72,734) and December contracts added 5,153 positions (91,232). DTN projected slaughter for Monday is 119,000 head.

FEEDER CATTLE:

Open: Steady to $1 higher. Firm buyer support seen in live cattle trade is helping to stimulate additional momentum in feeder cattle trade. The moves higher have not only helped to secure recent support levels, but are sparking renewed interest as traders continue to move prices off of seasonal lows with potential expectations of increased support later in week. Cash index for 9/9 is $141.10, up 0.12. Open interest Friday fell 266 positions (42,041).

LEAN HOGS:

Open: Mixed. The absence of triple-digit gains seen over the past two sessions has allowed for light to moderate position taking to be done in most nearby contracts. Lean hog futures started out higher, but quickly adjusted to a narrowly mixed range following limited early trade volume Monday morning. The tone of the market still remains bullish, although traders seem to be focusing on some concern that the recent gains seen over the past two weeks have not have not drawn any positioning activity to this point. Even if prices move lower through the day, the focus on how overall pork demand and export business will develop will continue to be long-term market shift, and could bring some additional volatility to the entire complex over the next couple weeks. Cash hog bids are expected $1 lower to $2 per cwt higher, with most bids steady to $1 higher. Open interest gained 2,025 positions (219,817). October slipped 7,159 positions (62,240) and December added 3,705 positions (77,828). Cash lean index for 9/10 is $63.28, up 0.92. DTN projected slaughter for Monday is 485,000 head. Saturday runs are expected near 170,000 head.

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

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