DTN Before The Bell Livestock

GENERAL COMMENTS:

Moderate to strong pressure in livestock trade quickly pushed prices lower as traders focused on the bearish outside market shifts Monday morning. The inability to break away from the stock market and grain market losses may continue to move livestock focus away from fundamental factors in the near term. Corn is trading lower in light to moderate trade. Stock markets are lower in limited morning trade. Dow Jones is 586 points lower with NASDAQ down 128 points.

LIVE CATTLE:

Open: 50 to $1 lower. Firm pressure is seen in all live cattle futures with increased focus on December contracts. The firm pressure in most all other commodity and stock markets Monday morning is creating widespread pressure in cattle markets as traders are taking a much less fundamental view of the market during early trade. These early losses could quickly expand through the day with increased pressure sparking additional liquidation in all contract months. Cash cattle interest remains extremely limited Monday morning. Although both sides are focused on the release of show list information and inventory needs developing through the week, the focus on the inability to hold last week's gains during morning trade is putting some doubt to the idea that last week's gains can be redeveloped. It is still very early to given any indication of cash trade for the week, especially with trade potentially delayed until the end of the week due to the cattle on feed report Friday. Open interest slipped 54 positions (296,811). October contracts lost 3,474 positions (38,699) and December contracts added 2,591 positions (119,655). DTN projected slaughter for Monday is 119,000 head.

FEEDER CATTLE:

Open: Steady to 80 cents lower. Early selling in all feeder cattle trade focused on quickly and steadily backing away from gains late last week. Although the move lower is creating concerns of further market pressure during the end of the month, prices still remain well above September lows, and the ability to hold these previous support levels remains a positive sign in all cattle trade. The focus through the week will partially be directed to the end-of-week release of the September 1 cattle on feed report, which is expected to post increased cattle placement levels once again. Cash index for 9/17 is $142.18, up 0.97. Open interest Friday added 187 positions (43,042).

LEAN HOGS:

Open: Mixed. Limited market direction is seen early Monday morning as traders focus on cautious optimism concerning the ability to maintain gains seen over the last two weeks. There appear to be growing concerns about what share of new export business the U.S. will get following countries banning German exports. But as of now, most of the numbers thrown out are true speculation. It is likely that additional marginal pork demand will be seen over the coming weeks and months, but the bulk of German business will still be picked up by other European countries, which could continue to pull prices back from previous highs seen during early September. The focus on cash and pork cutout values through the week will likely have a more immediate impact in futures market direction over the next couple of days. Cash hog bids are expected $1 lower to $2 per cwt higher, with most bids steady to $1 higher. Open interest added 203 positions (223,827). October slipped 1,662 positions (32,793) and December added 151 positions (94,864). Cash lean index for 9/17 is $69.58, up 1.74. DTN projected slaughter for Monday is 482,000 head.

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

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