DTN Before The Bell Livestock

GENERAL COMMENTS:

Livestock futures remain mixed in light to moderate support trickling into the market following firm cattle market gains through the last half of the week. Traders are focusing on supporting moves in cash cattle trade, while starting to adjust positions ahead of the afternoon cattle on feed report. The biggest change is expected to be a moderate drop in placements, which could build further buyer interest next week. Corn is trading higher in light to moderate trade. Stock markets are lower in limited morning trade. Dow Jones is 76 points lower with NASDAQ down 24 points.

LIVE CATTLE:

Open: Mixed. A combination of morning position taking and follow through buying has allowed for prices to bounce higher and lower through early trade. This is helping to spark additional interest through the end of the week with some trades starting to adjust for the afternoon cattle on feed report. Although estimates point to steady numbers from year ago levels, this would still be a strong bump higher from the previous month, and point to additional large supplies to work through the system in the coming months. Cash cattle trade remains generally quiet early Friday morning. There is still expected to be some trade developing before the weekend, but at this point it is uncertain if any additional business will hold out until after the cattle on feed report. Southern live deals have developed Thursday generally steady to slightly higher than last week's average. Northern trade is all over the place with early week dressed movement $1 to $3 per cwt lower, while live trade is seen $1 lower to $2 higher than last week's average. This could lead to a variable week of trade, and even more uncertainty knowing where the market trend is heading until all totals are reported and averaged early next week. Open interest added 35 positions (288,045). December contracts lost 1,379 positions (4,864) and February contracts slipped 698 positions (114,429). DTN projected slaughter for Friday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Traders in the feeder cattle complex continue to focus on the upcoming cattle on feed report Friday afternoon. With trade expectations pointing to a moderate pullback in placements from year ago levels, the potential for increased underlying support if placement numbers come in at or below expectations. There still remains uncertainty about short-term buyer support as commercial traders continue to focus on nearby contracts at the highest levels since August. The ability to keep January futures above $140 per cwt, while April and May contracts at or above $144 per cwt should instill renewed buyer support even though trade volume is expected to remain sluggish next week. Cash index for 12/16 is $137.19, up 0.55. Open interest Thursday added 1,021 positions (43,872).

LEAN HOGS:

Open: Mixed. Early price pressure in lean hog futures caused initial selling interest to move back into nearby lean hog futures with the focus on pork market weakness after Thursday' lower pork cutout values. Depth of selling interest remained relatively light, allowing for buyers to quickly refill that void, pushing prices slightly higher as more volume moves into the market. Although traders are looking for potential end-of-week support in the market, prices are expected to remain range bound, which could further limit active price moves through the complex. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents lower. Open interest fell 369 positions (180,425). February fell 1,051 positions (79,344) and April added 339 positions (40,523). Open interest in pork cutout futures added 34 positions (600). Cash lean index for 12/16 is $64.39, down 0.46. DTN projected slaughter for Friday is 479,000 head. Saturday runs are expected at 370,000 head.

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

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