DTN Before The Bell-Livestock

Cattle Futures Shift Lower

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Moderate early morning pressure is seen through the livestock futures as cattle trade is leading the move lower with traders squaring positions following aggressive gains the previous two trading sessions. Initial trade volume is expected to remain light, which could limit follow-through pressure later in the day. Corn futures are trading lower in light early trade. Stock markets are lower in light trade. Dow Jones is 21 points lower, while Nasdaq is down 21 points.

LIVE CATTLE:

Opening call: 80 cents to $1 lower. A moderate market pull back is developing Thursday morning. Most of the initial losses so far have been associated with position taking following the recent market surge higher. But traders are closely monitoring to see if the selling pressure will slow as the morning continues, helping to create confidence that the previous gains can gain additional traction through the end of the week. Cash cattle markets are starting to see more interest Thursday morning with bids of $118 redeveloping in the South and $182 per cwt seen in the North. It may be Friday before trade takes place, but the activity level is starting to increase so far early Thursday. Asking prices are likely to start around $128 in the South and $203 and higher in the North. Open interest Wednesday lost 1,664 positions (258,229). Spot October liquidated 2,676 positions (12,231) and December contracts slipped 2,002 positions (133,720). DTN projected slaughter for Thursday is 110,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1 Lower. Pressure has quickly developed through the feeder cattle futures as traders focus on creating some stability following the aggressive market surge higher over the last couple of days. Position taking is not unexpected given the triple digit gains seen through the market, but it will be interesting to see if selling pressure will be checked through the session or of markets will show signs of giving most of the previous gains back before the weekend. Open interest Wednesday lost 212 positions (34,720). Cash index for 10/6 is 182.27, down 0.02.

LEAN HOGS:

Opening call: Mixed. Light gains are still holding in front month October contracts as the focus through the market is turning on the lack of trader interest following the flurry of activity in the cattle market through the week. Other nearby contracts are posting narrow losses, as the weakness seen in the market is still not able to make a significant dent in recent market support through the complex. Cash bids are expected to be seen steady to 50 cents lower with most bids steady. Open interest Wednesday lost 16 positions (203,090). Spot month October liquidated 1,198 positions (17,031) and December added 18 positions (90,821). Cash lean index for 10/6 is 74.29, up 0.54. DTN projected slaughter numbers for Thursday are 435,000 head, with Saturday runs expected to be near 119,000 head.

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

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Rick Kment