DTN Before The Bell Livestock

GENERAL COMMENTS:

Hog futures are holding moderate losses Thursday morning as traders seemed to discount markets following a generally average export sales report. Traders are now focusing on the remaining reports of the week, Hogs and Pigs report affecting the lean hog complex, and Cattle on Feed report the focus of cattle trade. These reports may add additional end-of-week volatility to the complex. Corn is trading lower in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 5 points higher with NASDAQ up 55 points.

LIVE CATTLE:

Open: Mixed. Early losses trickled into live cattle futures, but downward pressure was extremely limited and gave way to narrow gains during early trade. Nearby futures are holding gains of 5 to 15 cents per cwt as the firming support in feeder cattle trade appears to be the spark to redevelop the limited buying across the live cattle complex. It is likely that narrow trading ranges will be seen through most of the session with limited direction expected until late in the week. Export sale reports were generally uneventful Thursday morning with no significant newsworthy market movements developing in late September in beef export markets. Cash cattle markets still remain quiet with bids hard to pin down at this point, although packer interest is expected to improve through the day. Given the cattle on feed report Friday, active trade may be delayed until sometime Friday and possibly until after the cattle on feed report at 2 pm Friday. Asking prices in the South are seen at $105 to $108, but still hard to quantify in the North. Open interest lost 1,137 positions (293,255). October contracts lost 1,030 positions (30,688) and December contracts slipped 217 positions (119,626). DTN projected slaughter for Thursday is 120,000 head.

FEEDER CATTLE:

Open: Mixed. Trade interest was slow to develop in feeder cattle trade Thursday morning, allowing for prices to start out mixed in a narrow range. But once the initial activity cleared the complex, firm buyer support started to slowly but steadily develop in all feeder cattle futures. The ability to hold light to moderate gains through the Thursday session is expected to spark renewed underlying interest at the end of the week, although the tone of the market remains stable, it is unlikely that traders will be willing or able to move through resistance levels anytime soon. The focus on growing placement numbers in Friday's cattle on feed report could curb current market optimism slightly in the near term. Cash index for 9/22 is $142.28, down 0.17. Open interest Wednesday slipped 140 positions (44,001).

LEAN HOGS:

Open: Steady to 30 cents lower. Hog futures remain lightly traded Thursday morning. Although there seems to be a little disappointment following a generally routine weekly export sales report which showed moderate sales to several countries, the lack of aggressive increases hoped for in order to replace German exports to most of these countries seemed to limit any sense of bullishness early Thursday. Pork exports last week totaled 37,800 metric tons with Mexico leading list of buying nations with 15,000 metric tons. China, Japan, South Korea and Canada rounded out the top five buyers representing 87% of all weekly exports to those five countries. Traders are looking for additional direction in the quarterly hogs and pigs report, which could add pre-report positioning through the session. Average estimates for total hog numbers look for fractional gains over year ago levels, but estimate ranges appear to be wide, giving the indication there is very little consistent thought of where total hog numbers will land once the report is released. Cash hog bids are expected $1 lower to $2 per cwt higher, with most bids steady to $1 higher. Open interest fell 522 positions (226,378). October slipped 1,165 positions (29,490) and December fell 1,182 positions (94,746). Cash lean index for 9/22 is $72.89, up 0.72. DTN projected slaughter for Thursday is 486,000 head. Saturday runs are expected near 228,000 head.

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

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