DTN Before The Bell-Livestock

GENERAL COMMENTS

Light trader activity early in the session Monday has limited losses initially, but it is expected that additional pressure is expected to develop in both live cattle and feeder cattle markets as additional volume steps into the complex. Strong gains seen Friday left feeder cattle markets with expanded trading limits Monday, which could allow for even more volatility through the complex. Hog trade remains firm although mixed trade is seen in a narrow trading range during the first few minutes of trade. Corn markets are trading mixed in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 68 points higher while Nasdaq is up 19 points.

LIVE CATTLE:

Opening call: $1 to $1.50 lower. Light to moderate pressure is slowly developing in live cattle futures with traders focusing on the strong late week positioning market bounce seen Friday. The overall tone seen during most of the week last week is expected to continue to redevelop as market pressure is starting to be seen with June and August futures are holding losses near $1 per cwt. Although little activity is expected to be seen in fundamentals early in the week, the expectations that the underlying market tone may continue to weaken and this could erode overall trader support through the session. Cash activity is expected to remain undeveloped Monday as show list distribution will be the main order of business once again early in the week. The sharp downward push in price levels seen last week may create some uncertainty in market direction as traders watch both futures trade and boxed beef price levels for clearer movement in order to determine further cash market activity levels later in the week. Open interest Friday added 4,282 positions (420,211). Spot June liquidated 8,559 positions (75,806) and August contracts added 10,043 positions (169,726). DTN projected slaughter for Monday is 115,000 head.

FEEDER CATTLE:

Opening call: Mixed. Feeder cattle futures have opened mixed in a narrow trading range early Monday morning. Following the extremely wide and volatile price shifts that have led to limit moves over several of the last trading sessions has allowed Monday's trade to enable expanded trading limits, early trade has been contained within 30 cent losses. It is expected that with additional volume stepping into the market later in the morning, prices will expand, but the lackluster interest so far seems to be limited to market activity in nearby contracts. Cash lean index for 5/10 is $145.50, down $2.16. Open interest Friday fell 601 position (57,292).

LEAN HOGS:

Opening call: Mixed. Light activity is expected to be seen during the morning Monday as traders are keeping prices within a narrow trading range. Front month May futures are holding a narrow 12 cent loss, while the rest of the nearby contracts are holding sluggish 2 to 25 cent gains in light early week trade. The ability to draw support on the recent fundamental support in the market is likely to bring about additional market activity. A move above $79 per cwt in June and July futures could also spark increased support through the rest of the morning helping to draw additional commercial activity through the rest of the session. Cash bids are steady to $1 higher with most bids steady. Open interest Friday added 615 positions (215,681). Spot month May lost 62 positions (1,155) and June fell 1,450 positions (40,140). Cash lean index for 5/10 is $69.12, up $1.48. DTN projected slaughter for Monday is 439,000 head.

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

(SK)

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