DTN Before The Bell Livestock

GENERAL COMMENTS:

Mixed trade seen in live cattle futures at opening bell tried to add price support to the complex. But lackluster interest is seen in all markets, which may continue to push prices lower midweek. Feeder cattle trade is leading the cattle complex lower with traders slowly but steadily backing away from last week's gains. Corn futures are trading lower in mixed trade. Stock markets are higher in limited morning trade. Dow Jones is 218 points higher with NASDAQ up 100 points.

LIVE CATTLE:

Open: Mixed. Live cattle futures have bounced higher and lower within a narrow trading range through the first few minutes after markets opened Wednesday. August live cattle futures are posting light losses, moving prices below $100 per cwt after trading at these levels earlier in the week. Although from a technical and fundamental perspective, limited direct change is expected to be seen if prices hover below $100 per cwt. But this lack of support could have a significant physiological impact on buyer interest through the rest of the week. Limited direction is likely to be seen in all live cattle trade Wednesday, although there will be more focus on any cash activity that develops, especially in the Fed Cattle Exchange, as well as movement in beef values at the end of the day. Cash cattle activity is quiet Wednesday morning with limited renewed bids and asking prices seen right away in the morning. The firmness in cash values seen Tuesday should help to bring some underlying support to feedyards asking prices through the rest of the week, given that futures trade hold in the current trading range. Limited volume is likely to be seen through the day with trade activity likely to trickle in through the rest of the week, but price ranges may have already been set. Live trade at $94 to $95 per cwt is steady to $1 higher than last week, while dressed trade is $3 to $6 per cwt higher with most trades at $157 to $160 per cwt following Tuesday's limited trade volume. Open interest slipped 1,427 positions (271,409). August contracts lost 6,554 positions (110,267) and October contracts added 4,221 positions (74,386). DTN projected slaughter for Wednesday is 120,000 head.

FEEDER CATTLE:

Open: Steady to 30 cents lower. Follow through weakness is slowly but steadily developing in nearby lean hog futures trade Wednesday morning. This underlying pressure in the complex continues to focus the potential that upside market moves may be limited over the upcoming weeks. Although feeder cattle prices are still trading in the top half of the sideways market range, the recent pressure in prices and lack of renewed short-term buyer interest has the potential to keep spot-month feeder contracts well contained within a $132 to $135 per cwt trading range. Cash index for 7/6 is $130.13, up 1.15. Open interest Tuesday added 335 positions (37,358).

LEAN HOGS:

Open: Steady to 25 cents lower. Light pressure holding across all lean hog futures trade Wednesday morning. There is very little market direction through the entire complex at this point with traders focusing on recent pressure in pork values and the inability to spark any demand support in wholesale pork values. Although prices continue to hold above long-term support levels for the time being, the potential to set new contract lows in nearby contracts is likely to create additional technical weakness as traders still remain concerned about the burdensome supply levels of hogs as well as uncertainty about demand growth. Cash hog trade is called 50 cents lower to 50 cents higher. Most bids are steady to firm. Open interest added 1,236 positions (230,133). July fell 1,261 positions (16,491) and August slipped 1,237 positions (80,015). Cash lean index for 7/6 is $45.90, up 0.24. DTN projected slaughter for Tuesday is 468,000 head. Saturday runs are expected near 278,000 head.

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

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