DTN Before The Bell Livestock

GENERAL COMMENTS:

Firm pressure in cattle trade followed Friday's cattle on feed reports. On feed and placement numbers were near estimated projections, leaving traders disappointed early Monday as they slowly move into what is expected to be a sluggish holiday week. Widespread outside market pressure is also limiting overall interest in the livestock complex. Corn is trading lower in light to moderate trade. Stock markets are lower in limited morning trade. Dow Jones is 352 points lower with NASDAQ down 198 points.

LIVE CATTLE:

Open: Steady to $1 lower. Active pressure in spot February futures is creating early-week uncertainty through the entire cattle complex. Coming off of strong gains last week, and cattle on feed numbers well on target with projections, traders are taking cover early in the week. Although the pullback in price levels is disappointing going into Christmas week, the ability to limit losses to current levels through the rest of the day may bring renewed buyer support over the next few days as traders continue to test longer-term market support before the end of the year. Cash cattle activity remains quiet with anticipation of the upcoming holiday week still keeping things calm. Needed trade for the week is expected to be front-loaded, with activity likely to be seen Tuesday or Wednesday, although the amount of cattle needing to be purchased in the negotiated market is still uncertain. Show list distribution and inventory taking will be accelerated Monday, although it is uncertain if bids or asking prices will develop before the day is over. Open interest fell 1,568 positions (286,497). December contracts lost 1,003 positions (3,861) and February contracts slipped 570 positions (113,864). DTN projected slaughter for Monday is 120,000 head.

FEEDER CATTLE:

Open: Steady to 60 cents lower. Moderate pressure developed in feeder cattle futures following general pressure in the entire cattle market and weakness in most outside markets Monday morning. With feeder cattle placements coming in near expectations in Friday's cattle on feed report, traders are slightly disappointed as these factors were already traded into the market last week, resulting in a portion of last week's gains. The challenge reports is not as much the change from previous periods, but how the report stacks up to traded expectations. Although the bearishness in the market is not likely to be sustained long term as traders still continue to focus on positive demand support over the near future, while limited volume is likely during the next two weeks. Cash index for 12/17 is $138.48, up 1.29. Open interest Friday added 780 positions (44,647).

LEAN HOGS:

Open: Mixed. Developing market pressure Monday morning in most commodity and outside markets has quickly impacted buyer interest in lean hog futures. Nearby futures are mostly lower, although nearby contract losses have been limited to 10 to 20 cents during the early minutes Monday. The expectation that light volume during the entire week will limit market interest, may challenge price stability due to potential volatility based on light trade. Traders are also looking for direction from reports later in the week with cold storage and hogs and pigs inventory reports being the main focus of the report cycle before the Christmas break. Cash hog bids are expected $1 lower to $1 per cwt higher, with most bids steady 50 cents lower. Open interest added 455 positions (180,880). February fell 280 positions (79,064) and April added 574 positions (41,097). Open interest in pork cutout futures added 22 positions (622). Cash lean index for 12/17 is $63.72, down 0.67. DTN projected slaughter for Monday is 483,000 head.

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

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