DTN Before The Bell Livestock

GENERAL COMMENTS:

Firm buyer support has quickly moved back into livestock futures with triple-digit gains held over from last week's bullish market shift in live cattle and feeder cattle trade. The ability to hold prices above $100 per cwt in August live cattle contracts is helping to spark renewed interest through the entire complex. Corn futures are trading higher in light trade. Stock markets are higher in limited morning trade. Dow Jones is 423 points higher with NASDAQ 180 points.

LIVE CATTLE:

Open: 30 cents to $2 Higher. Strong buyer support has flooded back into the live cattle futures with August and October contracts leading the shift higher with $1.90 to $2 per cwt respectively. These moves account to a $4 per cwt rally over the last two trading sessions. The morning has August futures above $100 per cwt, creating expectations of limited, but bullish buyer support continuing to develop over the near future. Cash cattle market activity remains quiet in all areas Thursday morning following light to moderate trade midweek. Although there is a very good possibility that additional trade will be seen during the day Thursday, at least in some areas, the bulk of trade may be wrapped up for the week as both sides turn their attention to the holiday weekend and market direction through the rest of July. Cash cattle interest is expected to remain sluggish through most of the morning with both sides returning from the long holiday weekend with the focus on establishing additional direction during the next couple of weeks. Show list distribution and inventory taking will take priority through the morning, although the potential for increased activity through the next couple of days would fit into the pattern seen this summer as trade has trickled into the market on a daily basis rather than waiting until the end of the week for active sales to develop. Open interest slipped 1,901 positions (274,555). August contracts lost 3,553 positions (122,344) and October contracts added 703 positions (68,961). DTN projected slaughter for Monday is 117,000 head.

FEEDER CATTLE:

Open: 70 cents to $1 Higher. Strong follow through support has moved into feeder cattle futures Monday morning. Nearby feeder cattle futures posted gains of $1 to $1.20 per cwt with August futures moving to $135.90 per cwt, which is the highest price in over a month. The ability to hold recent gains over the next couple of days is expected to go a long way in rekindling longer-term bullish support through the entire cattle complex. Increased price premium is starting to trickle into deferred feeder cattle futures, helping to focus on longer-term tightness in the market through the end of the year and early 2021. Cash index for 7/1 is $129.05 down 0.08. Open interest Thursday added 255 positions (37,253).

LEAN HOGS:

Open: Steady to $1 Higher. Lean hog futures bounced higher early Monday morning as follow-through buyer support held over from before the holiday break sparked renewed interest through the entire complex. August contracts led the complex higher, moving above the $50 per cwt level for the first time in nearly 2 weeks. The underlying support rebuilding across the complex has the opportunity to distance price levels from recent support levels, posting technical firmness through the entire complex. With packers focusing on strong underlying support in packing scheduled through the month of July, the expectation is that the market will become more current over the coming weeks. Cash hog trade is called $1 lower to 50 cents higher. Most bids are steady to firm. Open interest added 636 positions (227,009). July fell 864 positions (18,634) and August slipped 880 positions (82,189). Cash lean index for 7/1 is $45.01, down 0.27. DTN projected slaughter for Monday is 454,000 head.

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

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