DTN Before The Bell-Livestock

Early Gains Draw Increased Support to Livestock Trade

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Firm gains are seen early Wednesday morning as the late-day support Tuesday helped to bring additional interest back to the table. This is likely to add some increased momentum to the market as traders look for some additional longer-term activity and potential firm market support. Corn prices are higher in light trade. Stock markets are higher, Dow Jones is 61 points higher while Nasdaq is up 22 points.

LIVE CATTLE:

Open: 30 to 80 cents higher. Firm buyer support is moving into the live cattle complex early Wednesday morning. The focus on strong moves higher in feeder cattle trade is helping to stimulate additional interest. Although volume may remain sluggish through the first couple hours of trade, most market watchers are focusing on both fundamental moves and outside market direction as they decide just how aggressive to be early in the session. Cash cattle interest remains quiet early Wednesday morning. Bids are undeveloped with asking prices still hard to pin down in most areas. It is expected that packer interest will improve through the day, but active trade is not likely to develop until later in the week. Open interest Tuesday added 3,555 positions (360,779). Spot month June contracts lost 6,074 positions (117,461) and August contracts gained 6,516 positions (118,726). DTN projected slaughter for Wednesday is 118,000 head.

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FEEDER CATTLE:

Open: $1 to $2 Higher. Buyer support has slowly but steadily moved into the cattle trade. This has pushed front month futures more than $1 per cwt higher in early trade as the focus has moved back to rebuilding market support following recent pressure. It is likely that additional trade activity may develop over the near future, but this could limit additional direction in all cattle trade do to the recent market volatility and ability to cover positions midweek. Cash index for 5/7 is listed at $137.91 down 0.19. Open interest Tuesday added 135 positions (44,431).

LEAN HOGS:

Open: Mixed. Narrow price moves are seen early Wednesday morning with the focus on firm buyer support seen in summer contracts following the triple digit gains. A combination of follow through buying and early day position taking will likely keep prices mixed through most of the morning. Cash hog trade Wednesday are steady to $1 per cwt higher. Bids are generally scattered through the range. Open interest Tuesday lost 2,625 positions (248,718). Spot month May fell 41 positions (2,234) and June fell 6,517 positions (78,409). Cash lean index for 5/7 is $63.33, up 0.04. DTN projected slaughter for Tuesday is expected to be 465,000 head. Saturday runs are pegged at 43,000 head.

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

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Rick Kment