DTN Before The Bell-Livestock

Narrow Gains Develop in Live Cattle Trade Thursday

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

Narrow trading ranges have been seen through the entire complex with traders focusing on recent market gains seen over the last couple of trading sessions. Cash cattle activity remains on the back burner, but interest should improve through the day. Corn prices are higher in light trade. Stock markets are mixed, Dow Jones is 136 points lower while Nasdaq is up 6 points.

LIVE CATTLE:

Open: 10 to 60 cents higher. As of now, expanded trading ranges is not expected to be a major concern following the limit rally midweek. But the market remains firm as follow-through buying activity is helping to confirm recent gains. It is uncertain just how active trade will become through the day Thursday as traders are not only focusing on futures market shifts, but cash trade and beef values will be closely watched over the next couple of days. Cash cattle markets are quiet with just a few cattle reported sold in Kansas Wednesday at $110 per cwt. This is not enough to even get a good test of the market. Bids still remain undeveloped for the most part, but the overall focus on the recent futures rally could help to firm bids and asking prices through the end of the week. Open interest Wednesday fell 4,108 positions (348,530). Spot month June contracts lost 4,589 positions (36,943) and August contracts added 473 positions (166,591). DTN projected slaughter for Thursday is 118,000 head.

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FEEDER CATTLE:

Open: Mixed. Light activity is seen early Thursday morning with prices hovering in a narrowly mixed range. Prices are seen from 22 cents lower to 32 cents higher with light buyer support moving into the nearby contract months. The overall lack of aggressive moves early in the session may allow for traders to confirm earlier gains with increased overall focus on further long term support developing across the complex. Cash index for 5/29 is listed at $134.86 down 0.18. Open interest Wednesday liquidated 1,339 positions (43,740).

LEAN HOGS:

Open: 10 to 45 cents lower. Narrow losses have slowly trickled into the lean hog complex early Thursday morning following the strong triple digit gains over the last couple of days. This move lower is not expected to add much additional direction to the complex which is focusing on the ability to bring traders back to the market and continue to show seasonal support across the entire complex. There is likely to be some additional price shifts during the day with initial pressure potentially replace by increased buyer interest moving into the market. Cash hog trade Thursday is steady to $2 higher per cwt. Most bids are seen $1 higher. Open interest Wednesday fell 3,216 positions (239,271). Spot month June fell 2,712 positions (22,894) and July fell 156 positions (75,344). Cash lean index for 5/29 is $69.50, up 0.04. DTN projected slaughter for Wednesday is expected to be 461,000 head. Saturday runs are estimated at 232,000 head.

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

(SK)

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Rick Kment