DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate pressure has quickly developed early Thursday as traders quickly have started to adjust to the recent gains that have developed in both live cattle and feeder cattle contracts. December live cattle futures are leading the market lower in early trade with 77-cent-per-cwt losses, although trade volume remains light, as traders look for additional market direction through the rest of the morning. Corn futures are trading higher in light early trade. Stock markets are higher in light trade. Dow Jones is 2 points higher, while Nasdaq is up 5 points.

LIVE CATTLE:

Opening call: 50 cents to $1 Lower. Moderate price pullbacks are seen early Thursday morning as traders are focusing on taking positions following the aggressive near-limit gains which developed in front-month December futures Wednesday. Early losses have been kept extremely light so far, with volume remaining sluggish, but the lack of follow-through buying is creating some concern that traders may be looking at market stability through the end of the week rather than continuing to push prices past the $130-per-cwt price level over the near future. Cash cattle markets remain at a standstill with bids still not seen for the week, and may not develop until sometime on Friday. Asking prices are once again being seen at $131 and higher in the South, but it may be slow going through the rest of the week depending on the movement in futures trade. But the direction of futures trade will play a big role in just how much additional cash market activity will be seen through the rest of the day. Open interest Wednesday added 87 positions (272,741). Spot December fell 4,442 positions (61,781) and February contracts added 1,949 positions (102,867). DTN projected slaughter for Thursday is 109,000 head.

FEEDER CATTLE:

Opening call: Mixed. The inability to move prices higher following the strong midweek gains could create some uncertainty about end of the week support across the entire cattle complex. Mixed trade is seen through the cattle complex as front-month November futures are holding narrow gains while the rest of the complex is slowly backing away from previous gains. There may be some additional back-and-forth trade shifts seen through most of the morning, which could create market volatility at the end of the week. Open interest Wednesday gained 119 positions (35,266). Cash index for 11/17 is 176.72, up 0.28.

LEAN HOGS:

Opening call: Mixed. Lack of direction is seen in lean hog futures early Thursday with front-month December futures pointing to moderate initial gains, although very little follow-through support is seen in other nearby contracts. At this point, there is very little strong market support seen through the rest of the complex, which could indicate that traders may be looking for markets to stabilize in the current range until additional support can develop in market fundamentals. Cash bids are steady to 50 cents lower with bids scattered through the range. Open interest Wednesday lost 151 positions (203,770). Spot-month December fell 2,222 positions (41,453) and February added 886 positions (87,277). Cash lean index for 11/17 is 56.04, down 0.44. DTN projected slaughter numbers for Thursday are 435,000 head, with Saturday's run expected to be around 205,000 head.

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

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