DTN Before The Bell-Livestock

GENERAL COMMENTS

Sharp gains have flooded into all livestock trade Tuesday morning as traders are reacting to the losses seen Monday. This will likely keep markets elevated through most of the morning, but the two-day market swings are expected to add to the volatile structure through the rest of the week. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 100 points higher with Nasdaq up 44 points.

LIVE CATTLE:

Open: $1 to $2 higher. Active buying is moving into live cattle trade. The underlying support seen Tuesday morning is a reaction to the overly aggressive shift lower on Monday. Although there remains a lot of concern regarding the trade talks with China and what that will do to overall exports and beef demand, the focus on an oversold market is bringing buyers back to the table. Cash cattle markets remain sluggish with asking prices still generally undefined Tuesday morning. A few token bids are starting to show up through the South at $116 per cwt. This is $4 per cwt below last week's level, but the volatility in futures trade may limit market support as the week continues. Open interest Monday added 2,414 positions (377,720). Spot month June contracts lost 7,032 positions (93,128) and August contracts added 5,918 positions (131,107). DTN projected slaughter for Tuesday is 121,000 head.

FEEDER CATTLE:

Open: $1 higher. Firm underlying support is moving into cattle trade as traders react to the losses from Monday. This is bringing additional trade activity to the feeder cattle market, and the higher cattle prices are developing at the same time grain and feed markets are surging higher. The moves are less fundamentally based as technical market corrections are seen through the complex. Cash index for 5/10 is $135.39 down $0.14. Open interest Monday added 339 positions (50,069).

LEAN HOGS:

Open: $1 to $2 Higher. Buyers have quickly and aggressively moved back into the livestock complex and hog trade through the first few minutes of trade with prices in nearby trade $2 to $2.80 per cwt higher. The availability of expanded trading limits will allow prices to move $4.50 per cwt before markets are locked in limit moves, potentially adding to the volatility to the complex. The Monday weakness in most markets is viewed as overly aggressive, which is creating some increased overall concern that additional market swings may continue through the rest of the week. The overall concern about trade with China is still likely to limit long term support in the complex, but for now, traders seem content trying to regain market losses. Cash hog trade is called steady to $1 lower with most bids steady to weak. Open interest slipped 432 positions (305,002). June liquidated 3,228 positions (44,990) and July gained 1,762 positions (64,731). Cash lean index for 5/9 is $82.80 up $0.04. DTN projected slaughter for Tuesday is 464,000 head. Saturday runs are expected at 74,000 head

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

(BAS)

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