DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed trade is seen early in the session Tuesday as traders return from the holiday weekend. Overall activity remains sluggish so far, but volume is expected to improve through the rest of the morning. Cattle markets remain steady to slightly lower in limited trade interest while hog markets remain focused on moderate gains sweeping through the complex. Corn prices are lower in light trade. Stock markets are lower, Dow Jones is 148 points lower while Nasdaq is down 6 points.

LIVE CATTLE:

Open: 10 to 50 cents lower. Limited interest is seen through the live cattle complex as all cattle market activity remains sluggish. The focus on narrow 10 to 15 cent losses seems to be the trend in all contracts except front-month June contracts. It is expected that additional trade volume will develop as the morning continues, which could spark some buyer support based on potential buyer activity. Outside market direction is also expected to take a more active role through the complex early in the week, leaving markets vulnerable. Cash cattle markets are somewhat unsettled following the unusual trade activity seen last week. Very light activity was seen through the week which puts the emphasis on all of the cattle in the past month sold for delayed delivery. The fact that processing schedules are lighter this week due to the holiday on Monday is also keeping traders sluggish. Activity for the day Tuesday is expected to be focused on inventory taking and show list distribution, although cash market interest is likely to hold off until later in the week. Open interest Friday gained 279 positions (356,741). Spot month June contracts lost 1,864 positions (46,049) and August contracts added 1,765 positions (165,049). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: Steady to 30 cents lower. Light pressure is slowly moving through the feeder cattle complex with traders focusing on the ability to adjust positions following the strong triple-digit rally late Friday. Even though prices have shifted lower in nearby contracts, the overall volume so far Tuesday has been incredibly light with most 2019 contracts still untraded for the morning. Traders are actively searching for additional market direction and potential shifts that could draw additional movement through the complex through the rest of the morning, but for now trade is expected to remain in a narrow range. Cash index for 5/23 is listed at $134.44 up 1.01. Open interest Friday added 235 positions (47,258).

LEAN HOGS:

Open: 20 to 60 cents higher. Firm buyer support is slowly but steadily moving into the lean hog complex in the opening minutes of trade Tuesday. Traders have returned from the long holiday weekend with moderately bullish market intentions with the expectation that additional support may develop over the near future. There is likely to be some additional support developing across the complex which may spark some additional underlying activity price gains in late-summer contracts. Cash hog trade Tuesday is steady to 50 cents higher per cwt. Most bids are steady to firm. Open interest Friday fell 176 positions (244,670). Spot month June fell 1,936 positions (28,089) and July added 433 positions (75,283). Cash lean index for 5/23 is $69.29, up 0.26. DTN projected slaughter for Tuesday is expected to be 430,000 head. Saturday runs are estimated at 236,000 head.

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

(SK)

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