DTN Before The Bell-Livestock

GENERAL COMMENTS

Bids and asking prices in cattle country are not defined this morning. Feedlot managers and packers will probably pause at least a day or so before getting serious about pre-holiday procurement. Having said that, we're assuming that cash traders would like to have business wrapped up by late Thursday or early Friday in order to take full advantage of the long Memorial Day weekend. Hog buyers have hit the street this morning with bids ranging from 0.50 higher to $1 lower. However, most accounts appear to be working with steady money. Corn futures are trading 3 cents plus higher in the opening hour, supporting by ongoing dryness in Brazil. The stock market is modestly higher this morning with the Dow up 12 points and the Nasdaq better by 19.

LIVE CATTLE:

Live contracts are 22 to 67 lower in the early rounds as traders rebalance after yesterday's triple-digit rally. Both cash and board traders are looking for signs of convergence. Will it happen more from the cash side or more from the futures? Open interest on Monday increased by 1,412 (361,040). Spot June liquidated by 3,806 (57,225) and August jumped by 3,069 (161,911). DTN projected slaughter for today is 118,000 head.

FEEDER CATTLE:

Feeder contracts have open 22 to 77 lower as traders pull back some from Monday's big advance. Obviously, the stability of deferred live contracts will be closely watched b this market. The same can be said regarding the corn trade. Open interest on Monday increased by 269 (47,377). CME cash feeder index for 05/17: 133.58, off 1.25.

LEAN HOGS:

Nearby lean issues are under pressure so far this morning, off 85 to 112. Uncertainty surrounding the lifting of Chinese tariffs on U.S. pork is a problem. Additionally, some are worried that the board's premium to cash may be exceeding the potential of short term fundamentals. Open interest on Monday increased by 575 (239,723). Spot June liquidated by 1,783 (38,234) and July increased by 1,047 (71,526). Cash lean index 05/17: 67.74, up 0.73. DTN projected slaughter for today is 460,000 head. Early estimates if the Saturday kill are around 30,000 head.

John A. Harrington can be reached at john.harrington@dtn.com

(SK)

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