DTN Before The Bell Livestock

Outside markets are bearish for livestock prices early Wednesday. Dow Jones futures are trading down 492 points, the December U.S. dollar index is up 0.568, December gold is down $30.60 an ounce and December crude oil is down $2.12 per barrel.

LIVE CATTLE:

Open: 0.575 cents lower. December cattle are trading down 0.225 cents early Wednesday

The southwestern U.S. Plains are seeing a mix of ice and rain early Wednesday, but temperatures are gradually warming as the week progresses.

Slaughter has been keeping a good pace and Tuesday's slaughter was estimated at 117,000, up from 113,000 a year ago. Cash trade has yet to start the week and there are plenty of reasons to be bearish after last week's poor performance, but prices may get some encouragement from Tuesday's higher futures trade. Tuesday's boxed beef price was down $1.13 at $206.70 for choice, but up $0.18 to $188.67 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 4,255 at 276,795 on Tuesday's higher trade. December contracts were up 413 at 108,418 and February contracts were up 1,169 at 65,874.

FEEDER CATTLE:

Open: 0.525 cents higher. January feeder cattle are up 1.255 cents early Wednesday .

The elephant in the room for feeder cattle is that live cattle prices remain depressed and ongoing coronavirus concerns are still a threat to demand and a possible threat to production problems again this winter. The Feeder Cash index is listed at $133.70 for Oct. 23, 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 down 920 at 45,211 on Tuesday's higher trade. November contracts were down 968 at 5,768 and January contracts were down 34 at 24,437.

LEAN HOGS:

Open: 0.65 cents lower. December hogs are down 0.675 early Wednesday .

The most bullish factor for hog prices lately has been the CME's Lean Hog Index trading at $77.47 on Oct. 26, down $1.15 from a week ago and roughly $10 above the December contract. Pork carcass fell to $88.83 Tuesday, influenced by a $10.86 drop in the price of hams. Tuesday afternoon's negotiated hog price of $62.56 is far below the formula price and indicates packers are having no problems securing hog supplies. Tuesday's hog slaughter was estimated at 492,000, even with a year ago. Tuesday's packer margin was estimated by Dow Jones at $47.71 per head, which is lower, but enough to keep packers buying. Total open interest was down 287 at 217,925 on Tuesday's mixed trade. Open interest in the December contract was down 1,343 at 84,194 while February contracts were up 733 at 48,352.

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

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