DTN Before The Bell-Livestock

Mixed Cattle Trade Develop Early Friday

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

Narrowly mixed trade is developing through the livestock futures complex with early trade focusing on end of week position taking. Firmness seen through the week in cattle contracts is expected to bring a combination of follow through buyer support to end the week, as well as late week position taking. Corn futures are trading higher in light early trade. Stock markets are higher in light trade. Dow Jones is 41 points higher, while Nasdaq is up 13 points.

LIVE CATTLE:

Opening call: Steady to 50 cents lower. Light pressure is redeveloping across live cattle futures, although the tone of the market remains uncertain as of yet. The main focus through initial trade activity Friday is being placed on end of the week position covering. There will continue to be a lot of focus on both cash cattle trade through the end of the day and the ability to draw additional support into beef values. This could help to spark additional interest early next week. Cash cattle activity is expected to develop at higher prices Friday as cash markets will finally be impacted by the surge in futures price moves. It is uncertain just how aggressive early bids will be, and if this will spark aggressive numbers at the end of the week with packers looking to gain access to cattle before additional price gains are seen in the near future. Asking prices have moved to near $130 or higher in the South and $203 and higher in the North. Open interest Thursday lost 416 positions (257,600). Spot October liquidated 1,284 positions (10,947) and December contracts slipped 1,426 positions (132,081). DTN projected slaughter for Friday is 110,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1 higher. Moderate buyer support has redeveloped through the feeder cattle futures complex as traders focus on firmness in cash cattle trade likely to develop at the end of the week as well as buyers quickly stepping back into the complex looking for add on gains following the weeks market surge. It appears for now that the market may have hit bottom, as additional buyer volume is starting to reappear out of the woodwork. The potential support through the end of the month for sharp market gains is starting to be seen as traders focus on taking advantage of the oversold market status now that the perception of cattle market direction is changing. Open interest Thursday lost 63 positions (34,649). Cash index for 10/7 is 183.43, up 1.16.

LEAN HOGS:

Opening call: Steady to $1 higher. Firm buyer support has redeveloped Friday morning with nearby contracts holding gains of 30 to 80 cents per cwt in the first half hour after markets opened. It is still uncertain just how much additional price shifts will be seen following increased volume that typically steps into the market during the remainder of the morning. Traders continue to focus on the ability to draw additional price support into pork values, which may continue to spark follow through gains through the rest of October. Cash bids are expected to be seen steady to $1.50 lower with most bids steady. Open interest Thursday added 444 positions (203,528). Spot month October liquidated 573 positions (16,458) and December added 89 positions (90,903). Cash lean index for 10/7 is 74.75, up 0.46. DTN projected slaughter numbers for Friday are 428,000 head, with Saturday runs expected to be near 120,000 head.

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

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Rick Kment