DTN Before The Bell-Livestock

GENERAL COMMENTS

Light to moderate pressure is developing in cattle futures early Thursday morning with traders pulling back from the recent strong market support seen over the last couple of weeks. There is likely to be some additional widespread market volatility developing in live cattle and feeder cattle futures seen through the end of the week. Cash cattle trade is expected to continue to develop through the end of the week with potential price weakness likely from last week's levels. Hog futures are firm to higher during early trade as follow through support has stepped into the complex on fundamental support. Corn markets are trading lower in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 121 points lower while Nasdaq is down 42 points.

LIVE CATTLE:

Opening call: 40 to 70 cents lower. Early trade has been generally stable compared to recent market activity with prices hovering between 5 and 30 cent losses in the first few minutes of trade. This lack of market movement early Thursday morning could bring a sense of stability through the end of the week, although the recent market softness which has developed over the last couple of trading sessions has quickly taken the bullish edge off of the market that has been characteristic of the cattle complex over the last several weeks. It is uncertain just how much additional pressure is likely to develop in beef values and additional cash market weakness through the end of the week, but for the time being, futures trade remains lightly traded in a narrow range. Cash market activity remains sluggish early Thursday morning, but this follows light to moderate volume that surfaced through the afternoon Wednesday in the South. This pushed live deals as much as $7 per cwt lower than last week's weighted average price with prices seen from $134 to $139 per cwt, although most live sales are expected to be $138 per cwt. Additional trade is expected to be seen in the North through the rest of the week. Open interest Wednesday lost 2,958 positions (417,158). Spot June liquidated 13,681 positions (95,157) and August contracts added 8,731 positions (152,052). DTN projected slaughter for Thursday is 114,000 head.

FEEDER CATTLE:

Opening call: Mixed. Initial trade is mixed in feeder cattle trade, although the early support is expected to be focused on short covering and may quickly give way to additional liquidation seen over the last couple of trading sessions. It is uncertain just how much long term pressure will continue to develop in the complex, but given the fact that prices have pushed so sharply higher over the last couple weeks with such little resistance, the potential to move prices another $7 to $12 per cwt is not out of the question. Cash lean index for 5/9 is $148.66, down $0.07. Open interest Wednesday fell 594 position (58,770).

LEAN HOGS:

Opening call: Steady to 20 cents higher. Stability is slowly trickling back into the lean hog futures complex as light buyer support is moving into the market early Thursday morning. Traders are focusing on firm support seen in the last three weeks, helping to rebuild additional fundamental buyer support as spring and summer contracts are gaining momentum through the rest of the complex. Light volume is likely to develop in the next couple of hours, although traders will continue to focus on cash market moves later in the day. Cash bids are steady to $2 higher with most bids scattered through the range. Open interest Wednesday added 1,338 positions (213,597). Spot month May lost 167 positions (1,296) and June fell 4,613 positions (46,846). Cash lean index for 5/9 is $67.64, up $2.66. DTN projected slaughter for Thursday 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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