DTN Before The Bell Livestock

LIVE CATTLE:

Open: 82 cents higher. December cattle are trading up $1.82 early Tuesday, finding early support for prices near their lowest levels in four months. Cold temperatures were an issue again early Tuesday with single digits reported in the western Plains and sub-freezing temperatures reaching as far south as the Texas Panhandle. The southwestern U.S. Plains are also seeing a mix of snow, ice and rain early Tuesday, stressing livestock and travel. Temperatures are expected to rise after Tuesday and drier weather will return after Wednesday. Slaughter has been keeping a good pace and Monday's slaughter was estimated at 118,000, up from 116,000 a year ago. Dow Jones estimates Tuesday's slaughter at 119,000. Cash trade is light to start the week, coming off a lower performance last week. On Monday, USDA reported dressed negotiated steers at $164.23, $9.63 below the formula price with lower negotiated volume of 93,159 -- a bearish indication of either too much tonnage available or slow demand or both. Monday's boxed beef price was slightly higher at $207.83 for choice, but down $2.91 to $188.49 for selects. Technically, December live cattle are correcting from a four-month uptrend and should have support near $100.70, the June low. Total open interest was up 1,350 at 272,541 on Monday's slightly lower trade. December contracts were up 280 at 108,005 and February contracts were up 164 at 64,705.

FEEDER CATTLE:

Open: 50 cents higher. January feeder cattle are up $2.15 early Tuesday, finding support from its six-month low and getting some help from this week's more winter-like weather. As with cattle, feeders have benefitted from a return of consistent slaughter levels, but lately, cash prices have been slipping lower. The Feeder Cash index for October 23 is listed at $133.70, down $6.56 from a week ago and appears headed toward the lower November futures price. From a technical viewpoint, January feeder cattle are correcting their previous four-month rally and have potential support at the six-month low near $125.00. Total open interest was up 98 at 46,129 on Monday's higher trade. November contracts were down 305 at 6,736 and January contracts were up 126 at 24,469.

LEAN HOGS:

Open: 42 cents higher. December hogs are up $1.55 early Tuesday as traders anticipate more export business from China in spite of last week's losing attempt to trade above $70.00. China's national hog price is down roughly 20% in 2020, supporting claims that China's herd is gradually being restored and suggesting this year's bonus of pork exports to China may start to lessen the next few months. The most bullish factor for hog prices lately has been the CME's Lean Hog Index trading at $78.17, holding roughly steady the past week and roughly $10 above the December contract. Otherwise, pork cutouts fell to $91.86 Monday, influenced by a $13.17 drop in the price of bellies. Monday afternoon's negotiated hog price of $62.30 indicates hog supplies remain available for packers' needs. Monday's hog slaughter was estimated at 492,000, up from 491,000 a year ago. Dow Jones estimates Tuesday's slaughter at 489,000. Monday's packer margin was estimated by Dow Jones at $55.10 per head, enough to keep packers buying. Total open interest was up 203 at 218,216 on Monday's higher trade. Open interest in the December contract was down 752 at 85,535 while February contracts were up 608 at 47,619.

Todd Hultman can be reached at Todd.Hultman@dtn.com

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