DTN Before The Bell Livestock

GENERAL COMMENTS:

Firm pressure has quickly moved into livestock futures Monday morning with the most aggressive losses seen in cattle trade. Feeder cattle futures are showing the most aggressive weakness as concerns of long-term beef demand is affecting overall buyer interest. Corn futures are trading lower in light trade. Stock markets are lower in limited morning trade. Dow Jones is 558 points lower with NASDAQ down 69 points.

LIVE CATTLE:

Open: Steady to $1.50 Lower. Live cattle trade has turned lower Monday morning, although wide-ranging price swings are seen through the first few minutes of trade. Although triple-digit losses developed at opening bell, the lack of follow-through selling activity has limited market pressure, allowing for prices to moderate slightly, although prices still remain under pressure. Limited activity is expected to be seen through most of the morning, although traders could see additional volume based on moves in outside markets later in the day. Cash cattle markets remain quiet Monday morning with asking prices and bids still undefined at this point. Show list distribution and inventory taking is likely to be the main focus through the morning, although given the trend to trade cattle nearly every day over the last few weeks has some anticipating at least some light trade before the end of the day. Both sides will anxiously be focusing on the release of trade totals during the morning. This will give an accurate indication of trade averages for last week. Open interest added 358 positions (268,377). June contracts lost 829 positions (8,991) and August contracts fell 212 positions (127,577). DTN projected slaughter for Monday is 118,000 head.

FEEDER CATTLE:

Open: $1 to $2 Lower. Sharp triple-digit losses have quickly returned to feeder cattle futures with August futures quickly breaking below $130 per cwt. Although this move is not technically significant due to prices holding above initial support levels of $128.87 per cwt, the concern that this threshold could quickly be broken given the widespread pressure in livestock markets and most other outside markets Monday. Even though there continues to be underlying long-term support expected through the cattle complex, the lack of positive news in the near term is creating the opportunity for traders to liquidate positions Monday. A close below $128.87 per cwt would likely spark additional pressure through the week, although long term support levels still remain well entrenched given the recent gains seen in the market over the last two months. Cash index for 6/11 is $129.58, up 0.20. Open interest Friday added 113 positions (32,712).

LEAN HOGS:

Open: Mixed. Lean hog futures have opened mixed to mostly lower following widespread pressure in most commodity and financial markets Monday morning. Strong triple-digit losses in stocks as traders remain concerned about additional coronavirus outbreaks in the coming weeks and months has had a major impact on livestock markets. Although packing plant schedules continue to improve, clearing additional hogs from the already burdensome supplies, the concern that another round of covid-19 outbreaks in plants or communities could quickly disrupt the progress the industry has made over the last few weeks. July futures are holding narrow gains as the official front month contract due to June futures expiring last week. But active shifts in open interest to the August contracts has put additional price pressure on late summer and fall contract prices. Cash hog trade is called $1 lower to 50 cents higher. Most bids are steady to weak. Open interest fell 622 positions (224,912). June fell 281 positions (12,133) and July slipped 2,904 positions (36,010). Cash lean index for 6/11 is $48.97, down 1.02. DTN projected slaughter for Monday is 456,000 head.

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

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