DTN Before The Bell Livestock

Limited Buying Slowly Develops Friday Morning

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

GENERAL COMMENTS:

Traders have focused on end-of-week positioning Friday morning with narrow to moderate gains seen in cattle and hog trade. The ability to spark some additional interest, especially in lean hog futures through the rest of the day could help to solidify buyer support going into the weekend. Corn futures are trading higher in light trade. Stock markets are higher in limited morning trade. Dow Jones is 779 points higher with NASDAQ up 237 points.

LIVE CATTLE:

Open: Steady to 40 cents higher. Narrow gains are seen in all nearby live cattle futures with limited further support hard to pin down through the end of the week. Even though nearby contracts are holding a 30 to 40 cent gain, the inability to bring additional buyer activity to the complex may allow prices to hold the sideways pattern seen over the last couple of weeks. Given the narrow trading ranges and back and forth shifts seen during the week, the ability to hold these gains through closing bell would help to solidify a gain on the weekly charts. But limited direction is still expected to be seen in all contracts over the near future. Cash cattle trade may be essentially done for the week, although there still remain asking prices available at the top end of the weekly market. Another week of wide trading ranges has been seen with price ranges of $10 to $12 per cwt developing as the week continues. It will be interesting once again just how trade spread through the week will affect the overall price average, but all expectations are that average prices will move swiftly lower from last week. Open interest added 1,767 positions (268,019). June contracts lost 1,147 positions (9,820) and August contracts gained 1,147 positions (127,784). DTN projected slaughter for Friday is 116,000 head.

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FEEDER CATTLE:

Open: Steady to 70 cents higher. Firm gains seen in feeder cattle futures early Friday is helping to offset previous losses, although the tone of the market still remains generally weak. The focus on renewed support in live cattle trade combined with expectations that boxed beef values will start to stabilize over the upcoming days and weeks is sparking renewed end of the week interest in nearly all cattle futures. Cash index for 6/10 is $129.38, up 0.32. Open interest Thursday added 23 positions (32,599).

LEAN HOGS:

Open: Mixed. Moderate to firm gains are seen in July and August lean hog futures trade Friday morning as prices adjust to pressure seen over the last couple of days. The underlying stability in pork prices and potential for cash markets to remain steady is sparking some end of the week support through the entire complex. A few deferred contracts are holding limited losses, although the current firmness in the market has more to do with end of the week positioning than any significant fundamental or technical shift in market direction. Cash hog trade is called $1 lower to 50 cents higher. Most bids are steady to weak. Open interest added 4,781 positions (225,530). June fell 535 positions (12,411) and July slipped 2,591 positions (38,915). Cash lean index for 6/10 is $49.99, down 0.19. DTN projected slaughter for Friday is 446,000 head. Saturday runs are expected at 226,000 head.

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

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Rick Kment