DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate to strong pressure is seen through the entire livestock complex. Triple-digit losses have quickly flooded into cattle and hog futures despite the optimism seen before traders left for the weekend last week. Concerns over trade deals and how this would affect long-term demand is heavy on traders minds Monday. Corn markets are lower in light early trade. Stock markets are lower. Dow Jones is 561 points lower with Nasdaq down 231 points.

LIVE CATTLE:

Open: $1 to $2 Lower. Light trade is seen early Monday, although the tone of the market remains extremely sluggish. This may add even more weakness to the complex with additional pressure developing through the first half of the week. The recent softness in cash and wholesale beef values is adding concern to the market despite the firm late-week rally. Markets remain unsettled with nearby contracts once again testing support levels. Cash cattle interest is expected to remain sluggish with bids and asking prices likely unavailable. Show list distribution and inventory taking is expected to be the extent of activity Monday. Open interest Friday liquidated 546 positions (379,613). Spot month June contracts lost 7,058 positions (110,594) and August contracts added 3,928 positions (120,752). DTN projected slaughter for Friday is 121,000 head.

FEEDER CATTLE:

Open: $1 lower. Moderate pressure has redeveloped Monday morning as traders are quickly backing away from late week gains. The support seen Friday seemed to spark some underlying interest, but traders are now focusing on the potential to add even more bearishness to the market due to outside market pressure and lack of noncommercial support seen early in the week. Cash index for 5/8 is $135.53 down $0.30. Open interest Friday added 356 positions (49,106).

LEAN HOGS:

Open: Steady to $2 lower. Firm pressure is quickly moving back into all livestock trade following the attempt to push prices higher late last week. This may add increased volatility in the market with traders focusing on the overall lack of encouragement in trade talks with China. This could continue to be a long process with the outlook looking less positive over the last week. Deferred contracts have led the complex lower focusing on long term market pressure. Cash hog trade is called $1 lower to 50 cents higher with most bids steady. Open interest added 1,267 positions (304,559). June slipped 4,995 positions (55,068) and July gained 4,347 positions (57,666). Cash lean index for 5/9 is $82.80 up $0.04. DTN projected slaughter for Monday is 462,000 head.

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

(BAS)

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