DTN Before The Bell Livestock

GENERAL COMMENTS:

Limited but supportive buyer interest is slowly trickling into lean hog futures, although most contracts remain stuck in a narrow trading range. Cattle futures are extremely quiet with mixed prices keeping markets subdued through the morning. Corn is trading higher in light to moderate trade. Stock markets are mixed in limited morning trade. Dow Jones is 44 points lower with NASDAQ up 33 points.

LIVE CATTLE:

Open: Mixed. Lackluster market direction is seen early Friday morning with traders seemingly comfortable with the current pricing strategy and willing to focus on cash cattle and outside market moves through the end of the week before stepping back into the futures market. October futures are holding single digit gains, while most other contracts are trading similar small losses. The inability to break away from the "pennies per cwt" price moves seen through the morning will likely keep traders uninterested as many may step into other markets, looking for more action and price volatility before the end of the week. Cash cattle activity is still subdued Friday morning with bids not yet being seen in any areas. Asking prices remain at $105 live and $165 dressed or higher following light to moderate trade over the last few days in most areas. The expectation that additional trade will develop before the end of the week could help to support overall price levels, although it is uncertain just how much momentum to break out of the weekly trend will develop. Prices are generally $2 to $2.50 per cwt higher than last week. Open interest added 1,726 positions (296,866). October contracts lost 4,189 positions (42,172) and December contracts added 3,366 positions (117,066). DTN projected slaughter for Friday is 118,000 head.

FEEDER CATTLE:

Open: Mixed. Limited moves in feeder cattle futures seem to have kept traders on the sidelines Friday morning with most contracts contained between 10 cents lower and 12 cents higher. The underlying tone of the market appears to be consistently holding prices near $140 to $142 per cwt as traders still remain confident that seasonal lows have been set, but there remains underlying concerns that may limit aggressive further buying activity in the near future. This could create a narrow but well defined sideways market trend through the next several weeks as traders start to assess fall placement expectations, and further impact this may have on nearby and deferred futures prices. Cash index for 9/16 is $141.20, up 0.60. Open interest Wednesday added 206 positions (42,855).

LEAN HOGS:

Open: Mixed. Traders in the lean hog complex appear to be taking a breather early Friday morning, as trade has broken away from the choppy but aggressive up-and-down moves seen over the last week. This has left most traders holding limited gains of 10 to 30 cents per cwt, while a couple of contracts have posted light losses due to position squaring. The focus on potential export demand growth still is creating a bullish market undertone, although traders are at the point they need to see actual commitments of purchases before they become more aggressive. Cash hog bids are expected $1 lower to $2 per cwt higher, with most bids steady to $1 higher. Open interest added 1,640 positions (223,626). October slipped 1,908 positions (34,455) and December added 1,375 positions (94,715). Cash lean index for 9/16 is $67.84, up 1.42. DTN projected slaughter for Friday is 475,000 head, but is subject to change through the day. Saturday runs are expected near 190,000 head.

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

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