DTN Before The Bell Livestock

GENERAL COMMENTS:

Strong late-week buyer support is seen in all live cattle and feeder cattle futures Friday morning. These gains are a welcome relief following market pressure in cash cattle and boxed beef values. The ability to hold these gains through the end of the day is likely to stimulate additional early week gains next week. Corn is trading lower in light to moderate trade. Stock markets are lower in limited morning trade. Dow Jones is 61 points lower with NASDAQ down 36 points.

LIVE CATTLE:

Open: Steady to 90 cents higher. Moderate to firm gains have developed in the opening minutes of trade Friday. This has helped to rebuild support levels at $112 per cwt in February futures, sparking renewed interest following the recent market correction. The weak beef and cash cattle market may limit aggressive buyer support in the near future, but traders are looking for market firmness to develop as hopes of renewed beef demand through early 2021 are seen on vaccine hopes. Cash cattle interest remains light Friday morning, but some additional trade is expected to still need to get done before the end of the week. Prices are likely to remain steady with Thursday's activity as weekly prices remain under pressure compared to last week. Open interest added 2,316 positions (282,663). December contracts lost 941 positions (10,010) and February contracts added 567 positions (113,966). DTN projected slaughter for Friday is 118,000 head.

FEEDER CATTLE:

Open: Steady to $1 higher. Follow-through gains have quickly developed in feeder cattle futures despite the slow start Friday morning. Traders continue to focus on shifts in corn trade and closely focus on the direction of boxed beef movements. But the ability to gain additional underlying support through the complex may add even more interest late Friday. Cash index for 12/9 is $138.11, down 0.09. Open interest Thursday gained 290 positions (40,119).

LEAN HOGS:

Open: Mixed. Trade volume in lean hog futures remain extremely limited with very light activity developing across the entire complex. The ability for spot December contracts to hold single digit gains seems to be a sense of "calm" over the entire complex. The early price pressure in February futures is creating some limited concern through the complex as this has broken through support levels of $65 per cwt. But at this point, traders seem unwilling to aggressively liquidate positions, keeping markets generally stable at this point. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents lower. Open interest fell 1,658 positions (193,548). December fell 1,487 positions (10,213) and February slipped 663 positions (82,303). Open interest in pork cutout futures fell 2 positions (583). Cash lean index for 12/7 is $65.60, down 0.19. DTN projected slaughter for Friday is 492,000 head. Saturday runs are expected near 312,000 head.

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

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