DTN Before The Bell Livestock

GENERAL COMMENTS:

Early gains develop in all livestock trade with spill over support seen in live cattle and feeder cattle futures. The strong nearby support in lean hog futures is building on recent gains in pork values, which has sparked additional widespread interest midweek. Corn is trading mixed in light to moderate trade. Stock markets are higher in limited morning trade. Dow Jones is 80 points higher with NASDAQ up 45 points.

LIVE CATTLE:

Open: Steady to 30 cents higher. Limited follow through buying is seen in live cattle trade Wednesday morning as traders quickly focus on regaining price support after Monday's market tumble. It is uncertain just how much additional volume will step back into the market during the rest of the morning as traders will likely take a more cautious approach given the lack of fundamental price support during the week. The inability to push boxed beef values consistently higher may quickly limit further buy orders in nearby live cattle futures. Although at this point, the complex remains well entrenched within a sideways trading range. Cash cattle markets remain sluggish Wednesday morning with bids not yet redeveloping although asking prices seem to be holding along previous patterns. Cattle continue to be priced at $111 to $112 per cwt live basis, although asking prices on dressed cattle still seems illusive, but prices should become more evident as the day continues. Although some packer bids may start to become more plentiful as the day continues, most trade is likely to be pushed off until Thursday or Friday. Open interest liquidated 3,400 positions (274,880). October contracts lost 1,258 positions (6,979) and December contracts fell 2,595 positions (110,979). DTN projected slaughter for Wednesday is 120,000 head.

FEEDER CATTLE:

Open: 10 to 80 cents higher. Uniform support is seen in feeder cattle futures with nearby contract are holding 20 to 50 cent gains through spring contract months as traders focus on previous gains helping to add buyer confidence as the week continues. The most aggressive buying interest is seen in summer 2021 contracts as traders expect to see more stability in the cattle complex based on less disruptions to the supply system in the next year. It is uncertain just how active trade interest will become through the rest of the session with traders focusing on a combination of moves in live cattle trade as well as late week moves in grain markets. Cash index for 10/12 is $140.71, down 0.52. Open interest Tuesday fell 576 positions (42,115).

LEAN HOGS:

Open: 10 cents to $1.70 higher. Strong support in spot December lean hog futures has quickly moved the attention away from early-week pressure and back to the ability for pork values to test further gains during late week trade. With December contracts holding gains of $1.65 per cwt during initial trade, the focus on prices back above $67 per cwt has sparked renewed interest through the complex. This move has not only set new short term highs, but is also once again the highest price levels seen in December contracts since February. The next test of resistance levels remains at $68.50 per cwt, then $70 per cwt. Traders continue to wrestle with strong production levels and demand concerns, but the upward trend continues to hold. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady. Open interest added 1,215 positions (227,613). October fell 984 positions (10,089) and December fell 791 positions (91,161). Cash lean index for 10/12 is $78.21, up 0.07. DTN projected slaughter for Wednesday is 488,000 head. Saturday runs are expected near 257,000 head.

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

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