DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed trade is expected through most of the morning as traders balance between recent market support and the desire to cover positions at the end of the week. There continues to be some increased underlying concern surrounding the trade war with China and the impact on not only pork prices, but all commodity and financial markets. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 174 points higher with Nasdaq up 50 points.

LIVE CATTLE:

Open: Steady to 50 cents higher. Traders continue to focus on recent cash and wholesale beef contracts pressure likely to bring uncertainty to the live cattle complex. The ability to bring commercial buyer support back into the complex Thursday is likely to bring additional trade volatility into the complex even though overall trade remains sluggish through most of the session. End-of-week positioning is likely to be the main focus in nearby live cattle trade despite uncertainty through the entire complex, and outside market swings. Cash cattle activity is expected to remain slow Friday following light to moderate trade Wednesday and Thursday. Cash prices in the South were seen at $114 to $117 per cwt with most bids near the $117 per cwt level live basis. This is $3 per cwt below last week. Northern dressed trade developed at $185 per cwt, $7 below week ago levels. Some clean up trade is possible, but most of the needed trade is likely done. Open interest Thursday added 642 positions (381,148). Spot month June contracts lost 4,689 positions (78,660) and August contracts added 3,203 positions (143,070). DTN projected slaughter for Friday is 118,000 head.

FEEDER CATTLE:

Open: 50 cents higher. Strong underlying gains which developed late Thursday is expected to leave markets looking for a longer term direction through the end of the week. The tone of the feeder cattle complex still remains extremely weak with prices hovering just above contract lows. The potential for continued long-term buying is growing with the complex extremely oversold. But with the recent rally in corn prices, feeder cattle futures remain focused on increased production costs which will impact the entire cattle complex over the next several months. Cash index for 5/15 is $132.43 down $2.42. Open interest Thursday added 370 positions (51,099).

LEAN HOGS:

Open: Mixed. Limited trade is expected through most of the morning Friday with traders focusing on the strong underlying support through the last half of the week. June futures have rallied nearly $6 per cwt since Tuesday. Although underlying support remains firm through the complex based on current domestic demand and expectations that increased buying will develop based on the amount of hogs impacted by African Swine Fever. This may to leave markets stuck between end-of-week adjustments and position taking and firm expectations of continued demand. Cash hog trade is called $1 lower to $1 higher with most bids steady to firm. Open interest added 2,509 positions (311,445). June liquidated 1,295 positions (37,023) and July gained 1,492 positions (72,118). Cash lean index for 5/15 is $84.21 up $0.53. DTN projected slaughter for Friday is 454,000 head. Saturday runs are expected at 74,000 head.

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

(BAS)

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