DTN Before The Bell Livestock

GENERAL COMMENTS:

Mixed trade is seen in live cattle and lean hog futures Monday morning as traders continue to focus on support in outside markets. The potential to bring additional strong buyer support back to the market through the day Monday is limited, but current market direction is helping to curb the potential of strong follow through losses. Corn futures are trading higher in light trade. Stock markets are mixed in limited morning trade. Dow Jones is 273 points higher with NASDAQ down 10 points.

LIVE CATTLE:

Open: Mixed. Extremely narrow gains are seen in nearby live cattle trade as traders focus on support from outside markets. This is helping to curb the late-week losses seen Friday, but the underlying tone of the market still remains generally weak given underlying pressure through the entire complex. This will continue to add increased stability through early week trade, but could limit additional upward movement given the recent uncertainty and softness in cash and wholesale beef values. Cash cattle interest is expected to remain sluggish Monday morning as packers and feeders go back to the drawing board with show list distribution and inventory taking. Given the active cash cattle trade over the past three weeks, it is uncertain if show lists will once again be higher from last week as most feeders try to settle into a routine between cash cattle buying and formula trade. Some cash business may start to develop through the end of the day along the previous week's patterns, but it is unlikely that prices will be well established before midweek or later. Open interest tumbled 4,607 positions (268,132). June contracts lost 5,141 positions (15,545) and August contracts added 162 positions (125,007). DTN projected slaughter for Monday is 117,000 head.

FEEDER CATTLE:

Open: 50 cents to $1 lower. Follow through selling pressure is most evident in feeder cattle trade with spot August futures leading the move lower with $1 per cwt losses. The concern of how tumbling wholesale beef values will affect overall feeder cattle buying activity over the coming weeks and months as well as long-term beef demand growth through the end of the year is starting to have the greatest impact on overall trade activity through nearby feeder cattle contracts. Limited volume is expected most of the day, but this is still not minimizing the early morning losses. Cash index for 6/4 is $127.93, down 0.83. Open interest Friday added 216 positions (32,216).

LEAN HOGS:

Open: Mixed. Initial gains slowly trickled into nearby lean hog futures trade Monday morning as spill over support from higher outside markets brought about increased buying activity in the first few minutes of trade. Deferred futures posted limited losses as traders broke away from most other commodities and tried to take advantage of position taking opportunities due to the strong triple-digit gains in these contracts on Friday. This could leave additional narrow but moderate price adjustments through the rest of the morning. Cash hog trade is called $1 lower to 50 cents higher. Most bids are steady to 50 cents lower. Open interest added 520 positions (217,562). June fell 450 positions (13,710) and July slipped 4,099 positions (59,371). Cash lean index for 6/4 is $53.35, down 0.03. DTN projected slaughter for Monday is 441,000 head.

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

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