DTN Before The Bell Livestock

GENERAL COMMENTS:

Quiet trade seems to be the main takeaway early Wednesday morning with traders coming off of aggressive triple-digit swings Tuesday with little interest in showing significant market movement. Traders are likely focusing on end-of-month and -quarter positioning, which may limit additional market direction Wednesday. Corn is trading mixed in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 350 points higher with NASDAQ up 116 points.

LIVE CATTLE:

Open: Steady to 20 cents higher. Traders have quickly shaken off the initial narrow losses, but the inability to regain the market support seen Tuesday could keep prices mixed through most of the morning. Traders are looking for increased underlying support at the end of the month. Even though December futures are holding above $113 per cwt, the focus on lackluster end of the month activity could limit further technical support. Even if prices do not show aggressive price gains Wednesday, the ability to retain earlier-week gains is still important and should not be taken lightly given the amount of cattle still moving through the system and uncertainty of further strong beef demand growth in the near future. Cash trade remains undeveloped Wednesday morning and is likely to see very little interest until Thursday or Friday. A few asking prices are being seen in the South at $109 per cwt, although asking prices in the North and bids in all areas remain hard to pin down. With the end of the month and quarter, it is likely that both sides are becoming more comfortable moving weekly trade into October. Feeders are unlikely to back away from asking prices anytime soon if recent gains hold in futures markets. Open interest gained 6,394 positions (303,541). October contracts lost 1,421 positions (127,486) and December contracts added 4,210 positions (127,486). DTN projected slaughter for Wednesday is 120,000 head.

FEEDER CATTLE:

Open: Mixed. Cattle prices are bouncing around within a narrow range Wednesday morning following aggressive triple-digit gains Tuesday. Although the underlying tone of the market still remains firm, and could post additional strong buyer support before the end of the session, light pressure is seen in several contract months as traders attempt to square positions. Month- and Quarter-end trade is likely to develop through the day as some traders are not as much concerned about the price movement at the end of the session, but being able to square positions before the end of the day will likely take precedent. Cash index for 9/28 is $142.36, down 0.25. Open interest Tuesday fell 1,200 positions (42,864).

LEAN HOGS:

Open: Mixed. Nearby lean hog futures are battling back following aggressive losses Tuesday with traders trying to square positions in front of month end and spark renewed buyer confidence at current price levels. Narrow gains are seen in several nearby contracts with prices 2 to 20 cents higher. The lack of consistent support through the complex suggests that additional seller pressure may still be waiting on the sidelines based on concerns that hog supplies will limit further price support during early October. Additional news of more wild boars with ASF in Germany continues to cause uncertainty about how much additional pork demand will be seen in U.S. exports. This has traders closely watching Thursday's weekly export sales report. The inability for Germany to contain any ASF cases to current regions will significantly hinder any chance of making trade agreements based on affected regional production rather than the nationwide ban currently seen. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady. Open interest fell 572 positions (229,458). October slipped 1,601 positions (25,024) and December added 557 positions (96,098). Cash lean index for 9/28 is $75.91, up 0.49. DTN projected slaughter for Wednesday is 470,000 head. Saturday runs are expected near 200,000 head.

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

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