DTN Before The Bell Livestock

GENERAL COMMENTS:

Hog futures have taken the spotlight early Friday morning as a continued oversold market structure has allowed for limited but firm buying to develop in the lightly traded market. Cattle futures are mixed in a narrow trading range with limited direction expected through the end of the day. Corn futures are trading lower in mixed trade. Stock markets are lower in limited morning trade. Dow Jones is 75 points lower with NASDAQ down 9 points.

LIVE CATTLE:

Open: Mixed. Narrowly mixed moves have slowly trickled into nearby live cattle futures, although firm pressure is seen in other deferred contracts. The inability to rekindle early-week buyer support is weighing on the market structure and could add increased pressure through the entire live cattle market. Without a major shift in outside markets or cash cattle trade, it is likely that live cattle markets will continue to hold in the current pattern through the end of the week. But even with current price levels, the ability to sustain pricing at the top end of the trading range is helping to spark additional buyer interest moving into the market. Cash cattle markets remain quiet Friday morning, although there is still expected to be some development before the end of the week. Asking prices remain at $102 live and $165 dressed. Following trade during the week at $99 to $101 live and mostly $163 dressed, the expectation that prices will remain steady to firm with early week levels. This would push prices $3 to $4 higher from last week. Open interest added 696 positions (287,582). August contracts lost 1,990 positions (25,043) and October contracts added 144 positions (124,755). DTN projected slaughter for Thursday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Feeder cattle futures remain stuck in a narrow trading range early Friday morning, hovering from 27 cents lower to 20 cents higher with little sense of direction yet developing across the complex. Traders continue to focus on the movement in cash cattle trade as well as the ability for live cattle futures to stabilize and potentially show a late week rally. But for now, it appears that prices may continue to bounce back and forth within a narrowly mixed trading range as traders patiently (or not so patiently) wait for the session to close. Cash index for 8/4 is $140.60, up 0.10. Open interest Thursday added 903 positions (43,231).

LEAN HOGS:

Open: Steady to $1 Higher. End-of-week buyer support quickly and aggressively moved into lean hog futures trade Friday morning. The strong triple-digit bounce in pork cutout values helped to rekindle end of the week buyer support across the complex. Most of the buying has been contained to nearby August and October futures. This has pushed prices just above the $50 per cwt price levels. The ability to hold prices at these levels through the end of the week will likely give the market a shot in the arm going into Monday's trade. Although there is very little change expected in the technical of fundamental short-term outlook in the hog market. Cash hog bids are expected 50 cents lower to $1 per cwt higher with most bids steady to 25 cents lower. Open interest fell 36 positions (228,025). August fell 3,515 positions (14,599) and October slipped 378 positions (105,909). Cash lean index for 8/5 is $52.78, down 0.14. DTN projected slaughter for Friday is 476,000 head. Saturday runs are expected at 226,000 head.

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

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