DTN Before The Bell Livestock

GENERAL COMMENTS:

Wide price swings through the second quarter in all livestock futures is causing many traders and market watchers to anticipate the end of the quarter and move on to a hopefully more positive market structure. There is expected to be very limited market movement during the session with early trade mixed in a very narrow range. Corn futures are trading higher in light trade. Stock markets are mixed in limited morning trade. Dow Jones is 26 points lower with NASDAQ up 36 points.

LIVE CATTLE:

Open: Mixed. Most traders seem very comfortable watching the live cattle complex from the sidelines with limited activity expected not only Tuesday, but through the end of the week. Live cattle futures are contained in a narrow range from 20 cents lower to 20 cents higher, but overall market direction is not expected to change. There is likely to be some additional limited position adjustments as traders try to close out the end of June and second quarter. But the focus on the market continues to be placed on potential demand growth through the rest of the summer, which traditionally brings little support to the market. Cash cattle markets are quiet with bids and asking prices hard to pin down for the morning. Although limited interest is now been seen, another round of light trade activity is possible before the end of the day. With the limited trade volume seen Monday, it is hard to pinpoint a market trend, but the few sales reported posted lower price levels with dressed trade at $152 to $153 per cwt, while live trade seen at $91 to $92 per cwt. Generally $1.50 to $4 per cwt lower than last week's average prices, and could add to further market weakness heading into the holiday weekend. The discount to futures trade in cash markets signals a change in overall market direction, which may continue to limit cash market support over the near future. Open interest added 294 positions (275,053). June contracts lost 870 positions (317) and August contracts remain unchanged positions (129,352). DTN projected slaughter for Tuesday is 121,000 head.

FEEDER CATTLE:

Open: Steady to 45 cents lower. Feeder cattle futures are taking the brunt of the market pressure seen Tuesday morning. Although trade volume remains extremely limited, the focus on recent cash market losses and concern that growing covid cases will continue to have long term impacts on beef demand is creating cautious buying in the feeder cattle trade as feeders try to plan for not only year-end market expectations, but also well into 2021. Even with February and April live cattle futures trading at a $11 to $13 per cwt premium to spot August contracts, these price spreads create concern given the tight cattle supplies expected through that time period. Cash index for 6/26 is $129.68 down 0.36. Open interest Monday added 346 positions (36,229).

LEAN HOGS:

Open: Mixed. Trade Tuesday morning has been subdued with most traders already adjusting positions in front of month and quarter end, with little to no additional market direction expected in the near future. With the upcoming holiday weekend quickly approaching, trade is expected to hover within the current trading range until early next week. Nearby contracts are contained from 15 cents lower to 12 cents higher, as most of the focus remains on the ability to increase holiday pork demand and focus on overall packer movement surrounding the holiday breaks. Cash hog trade is called $1 lower to 50 cents higher. Most bids are steady to firm. Open interest fell 312 positions (219,669). July fell 413 positions (20,207) and August eroded by 659 positions (84,512). Cash lean index for 6/26 is $45.23, unchanged. DTN projected slaughter for Tuesday is 468,000 head. Friday runs are expected near 200,000 head with no slaughter scheduled for Saturday.

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

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