DTN Before The Bell-Livestock

GENERAL COMMENTS

Activity in the livestock market remains active with strong triple-digit gains flooding back into the cattle market. This support is quickly moving back into the market, but could add volatility to the complex through the day. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 20 points higher while Nasdaq is up 22 points.

LIVE CATTLE:

Opening call: $1 to $1.50 per cwt higher. Strong gains have quickly redeveloped in live cattle futures with firm gains seen in nearby contracts. Although June futures are still nearly $2 per cwt under the contract highs set last week, August futures have regained these contract high levels through morning trade and are gaining additional commercial interest through morning trade. The ability to draw buyer activity based on not only fundamental support but technical shifts in the market is allowing for additional volume to move back into the market and wide spread open interest shifts to be seen from the June to the August contract months over the last couple of trading sessions. Cash cattle markets remain quiet, although prices are expected to be prices $2 to $3 higher than last week. Generally $150 on a live basis. It is expected that active trade will be delayed until midweek or later. Open interest Monday lost 890 positions (422,025). Spot June liquidated 16,265 positions (123,832) and August contracts added 11,948 positions (133,052). DTN projected slaughter for Tuesday is 114,000 head.

FEEDER CATTLE:

Opening call: $1 to $2 higher. Triple-digit gains have quickly redeveloped early Tuesday morning. This is allowing for commercial buyer support to move quickly back into the feeder cattle markets as May futures have moved back near $150 per cwt with fall contracts nearing $160 per cwt levels once again. A break through last week's resistance levels and moves to new contract highs through the week is likely to spark another round of buyer support over the near future. Cash lean index for 5/5 is 148.08, up 3.73. Open interest Monday added 85 position (58,830).

LEAN HOGS:

Opening call: Steady to 30 cents higher. Firm buyer support has slowly redeveloped through lean hog futures Tuesday morning following the follow through fundamental buyer interest that continues to move back into the lean hog complex. This may continue to lead to firming support through the month of May as supply tightness is the main focus of the market in the next couple of days. Traders are mainly focused on June and July trade activity where traders are assessing summer needs as increased procurement is expected to be seen as plant expansion will continue to be seen through the summer also. Cash bids are steady to $1 higher with most bids $1 higher. Open interest Monday lost 201 positions (214,815). Spot month May lost 117 positions (1,647) and June fell 5,717 positions (58,254). Cash lean index for 5/5 is $64.79, up $1.24. DTN projected slaughter for Tuesday is 442,000 head. Saturday runs are expected at 89,000 head.

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

(SK)

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