DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm early gains have moved into lean hog trade Friday morning. The break away from aggressive triple-digit losses in hog and cattle markets is allowing for light to moderate short covering activity at the end of the week. It is uncertain if buyer support is deep enough to sustain higher prices through the end of the week, or if prices will start to erode as the session continues. Corn markets are higher in light early trade. Stock markets are lower. Dow Jones is 46 points lower with Nasdaq down 50 points.

LIVE CATTLE:

Open: Mixed. Limited stability is being sought in live cattle trade Friday with buyers attempting to step back into nearby contracts. The overall lack of support through the entire complex through the week has added uncertainty about not only sustaining previous market ranges, but the ability to regain market support over the next few weeks. Total open interest in live cattle futures tumbled sharply through the end of the week with traders liquidating over 18,000 contracts in the last two trading sessions. This may continue to push commercial and noncommercial traders to the sidelines through the end of the month as traders still in the market are looking for potential longer term direction. Cash cattle business is likely to be done for the week following midweek trade in the South, steady with last week, and moderate to active trade Thursday $3 per cwt lower than week-ago levels. The potential for some light clean up trade may be seen, but currently packers remain quiet and likely will wait until next week to get a better sense of overall market direction. Open interest Thursday liquidated 10,726 positions (433,456). Spot month April contracts lost 1,742 positions (1,664) and June contracts slipped 8,813 positions (176,909). DTN projected slaughter for Friday is 118,000 head.

FEEDER CATTLE:

Open: $0.50 to $1.25 lower. Additional pressure is quickly moving back into the complex Friday morning with August futures holding triple-digit losses as traders remain concerned that previous market pressure will limit any near term interest. Although overall seasonal support for beef continues to remain firm, the sharp losses during the week and expected continued supply levels will keep markets under pressure over the near future. Limited volume is expected Friday, potentially keeping buyers on the sidelines. Cash index for 4/25 is $144.96 down $0.82. Open interest Thursday fell 620 positions (53,357).

LEAN HOGS:

Open: Steady to $1.40 higher. Light to moderate buyer support has returned to the lean hog complex early Friday morning as traders focus on end-of-week market adjustments following sharp limit losses Thursday. The emotional reaction to the lack of China sales in the export sales report pushed markets lower with no one willing or able to step in front of the complex in order to limit losses. The overall focus on long term sales to China and potential underlying support, even if it is not at previous levels will likely prevail once more of the emotion gets washed out of the complex. The fact remains that traders have expanded trading limits at their disposal through the day Friday, which could add even more volatility and price swings through the end of the week. Early morning focus on covering short positions following the weekly volatility. Cash hog trade is called steady to $1 lower with most bids steady to weak. Open interest added 552 positions (311,805). June added 994 positions (80,699) and July fell 177 positions (41,130). Cash lean index for 4/25 is $83.40 up $0.61. DTN projected slaughter for Friday is 456,000 head. Saturday runs are expected at 146,000 head.

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

(BAS)

Copyright 2019 DTN/The Progressive Farmer. All rights reserved.