DTN Before The Bell-Livestock

Gains Continue Thursday

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

Mixed trade continues through the entire livestock market. Renewed near term buyer support is moving back into hog trade following sharp midweek gains. Despite no additional sales to China in the morning export sales report, June through October futures have firmed. Cattle futures are mixed to mostly lower with follow-through weakness in feeder cattle trade setting the tone for the weaker market structure. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 2 points higher with Nasdaq up 31 points.

LIVE CATTLE:

Open: Mixed. Narrow to moderate gains are stepping back into live cattle trade and pushing summer contracts slightly higher. Deferred futures have followed the recent weakness in feeder cattle markets, sparking additional uncertainty through the entire complex. There is very limited market news developing in the entire cattle complex with firm overall beef demand reported along seasonal patterns. The latest shift lower is primarily technically driven with outside market factors also having a significant impact in the ability for cattle traders to remain in the market. This could spark additional volatility through the entire market over the near future with current liquidation slowly fading over the last couple of trading sessions. Cash cattle activity is expected to remain sluggish through most of the morning following light to moderate trade in all areas over the last couple of week. Most of the trade is likely to be wrapped up, although some additional deals are likely through the next couple of days. Open interest Wednesday liquidated 405 positions (417,442). Spot month June contracts lost 3,587 positions (156,276) and August contracts added 2,072 positions (118,317). DTN projected slaughter for Thursday is 119,000 head.

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FEEDER CATTLE:

Open: Mixed. The overall tone of feeder cattle trade remains weak, although a combination of short covering is being mixed with follow-through selling pressure moving through the complex. Although the entire market remains oversold, there still remains increased uncertainty through the complex and the inability to bring buyers back to the table. This could lead to additional underlying pressure through the next several trading sessions. Cash index for 4/30 is $144.63 down $0.03. Open interest Wednesday fell 252 positions (50,025).

LEAN HOGS:

Open: Mixed. Firm buyer support moved into nearby contracts with June futures leading the additional support with gains nearing $2 per cwt through the first few minutes of trade. The overall lack of support from export sales reports and no additional trade to China listed has slowly started to erode buyer interest in deferred contract months. This could keep prices mixed through most of the morning as traders continue to separate short-term and long-term market direction. There still remain more questions than answers concerning trade to China and any trade deal that may develop. This will keep market shifts more emotionally driven than actually fundamentally sound. Cash hog trade is called steady to $1 lower with most bids steady to weak. Open interest added 2,798 positions (320,030). June slipped 324 positions (81,618) and July gained 1,608 positions (47,227). Cash lean index for 4/29 is $83.27 down $0.19. DTN projected slaughter for Thursday is 475,000 head. Saturday runs are expected near 32,000 head.

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

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Rick Kment