DTN Before The Bell Livestock

LIVE CATTLE:

Open: 2 cents lower. December cattle are trading up 5 cents early Thursday, finding slight encouragement from a favorable report of third-quarter U.S. GDP and slightly higher cash trade on Wednesday. Earlier Thursday, USDA said 18,900 metric tons (mt) of beef were sold for export last week, a lower amount that included 4,300 mt for China. The southern U.S. Plains are seeing some rain early Thursday, but temperatures are warmer and the forecast is largely favorable for livestock in the week ahead. Slaughter has been keeping a good pace and Wednesday's slaughter was estimated at 118,000, even with a year ago. Dow Jones estimates Thursday's slaughter at 120,000. Light cash trade has started around $105.50 to $106.25 for live cattle, roughly a dollar higher than last week with help from this week's higher futures prices. We're still waiting for dressed business. Wednesday's boxed beef price was down $0.91 to $205.79 for choice, but up $0.91 to $189.58 for selects on 173 loads. 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 2,955 at 279,911 on Wednesday's higher trade. December contracts were down 781 at 107,794 and February contracts were up 959 at 66,833.

FEEDER CATTLE:

Open: 5 cents higher. January feeder cattle are down 10 cents early Thursday, a quiet start to the day with mixed messages from corn. Corn prices are trading lower a second day early, but had heavy export sales reported in both, USDA's weekly report and in a Thursday announcement, which was mostly for Mexico. The Feeder Cash index is listed at $133.32 for Oct. 27, down $5.04 from a week ago and is nearly two dollars below the October futures contract, which expires later Thursday. 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 205 at 45,005 on Wednesday's higher trade. November contracts were down 450 at 5,318 and January contracts were up 233 at 24,669.

LEAN HOGS:

Open: 57 cents lower. December hogs are down $1.25 early Thursday, showing disappointment after USDA reported 29,000 metric tons of pork sold for export last week. Behind Mexico, Japan and South Korea, China was fourth in line with 2,500 mt purchased. China's national hog prices are roughly 20% lower in 2020, a sign the herd is slowly coming back. The most bullish factor for hog prices lately has been the CME's Lean Hog Index trading at $76.27 on Oct. 27. The index has been falling though, down $2.42 from a week ago and is still roughly $10 above the December contract. Pork carcass fell to $84.52 Wednesday, weighed down by a $22.31 drop in the price of bellies. Wednesday afternoon's negotiated hog price of $61.76 is far below the formula price and shows hogs are readily available to packers. Wednesday's hog slaughter was estimated at 492,000, up from 476,000 a year ago. Dow Jones estimates Thursday's slaughter at 490,000. Wednesday's packer margin was estimated at $40.42 per head, down almost $15 in two days, but wide enough to keep packers interested. Total open interest was up 2 at 217,924 on Wednesday's lower trade. Open interest in the December contract was down 1,524 at 82,668 while February contracts were up 1,532 at 49,883.

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

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