DTN Before The Bell-Livestock

GENERAL COMMENTS

Cattle markets are mixed in light trade with narrow price moves seen in most of the contracts. This lack of additional pressure is helping to build needed stability into the market and giving the market a much needed reprieve. Follow-through buyer support is seen in lean hog futures as traders are looking for additional market support. Corn markets are trading higher in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 239 points lower while Nasdaq is down 79 points.

LIVE CATTLE:

Opening call: Mixed. Light gains are holding in nearby live cattle trade as buyers are trying to stabilize nearby contracts. This is helping to bring some much needed stability into the market, following the sharp losses seen in the complex over the last couple of weeks. June futures have moved back above the $122 per cwt price levels, with a 35 cent per cwt gain. Even though gains are light, the price support remains huge as this threshold point seems to be the tipping point of the market over the last couple of weeks. Trade remains light early Wednesday morning and is expected to remain that way through much of the session. Cash markets remain quiet with bids are undeveloped at this point even though a few starter bids started to be seen late in the day Tuesday. Asking prices are expected to redevelop around the country with prices in the South at $138 to $142 and $220 and higher in the North. Even though a wide gap will be seen between asking prices and bids initially, the gap may quickly close over the next couple of days. Cash trade may not be seen until sometime Thursday or Friday. Open interest Tuesday liquidated 1,518 positions (416,293). Spot June liquidated 3,185 positions (66,680) and August contracts added 3,561 positions (173,605). DTN projected slaughter for Wednesday is 116,000 head.

FEEDER CATTLE:

Opening call: Mixed. Narrow trading ranges are seen in feeder cattle contracts early Wednesday morning. In the opening minutes of trade, feeder cattle futures have opened from 15 cents lower to 25 cents lower as trades are attempting to show market stability after trading sharply lower over the last several market sessions. If the market slide can be halted at this level, there is potential for additional underlying longer-term buyer support to redevelop and commercial buyer interest to still be salvaged for seasonal support. But the concern is that the movement higher during the morning is short covering, and traders will be watching to see if traders will hold onto gains through the morning. Cash lean index for 5/15 is $142.20, down $0.78. Open interest Tuesday fell 16 position (56,980).

LEAN HOGS:

Opening call: 30 to 80 cents higher. Firm buyer support is developing through lean hog futures as traders continue to focus on the ability for additional cash market support to develop into the complex. This may add to the already strong support developing in June and July futures as June contracts take over as front month futures over the last two trading sessions. A move above $80 per cwt in summer contracts would be a huge shot in the arm both fundamentally and technically in the lean hog complex and could catapult the lean hog market into additional market support over the near future. Cash bids are steady to $1 higher with most bids steady to 50 cents higher. Open interest Tuesday added 3,471 positions (220,935). Spot month June lost 962 positions (37,506) and July added 1,353 positions (59,437). Cash lean index for 5/15 is $73.01, up $1.07. DTN projected slaughter for Wednesday is 438,000 head. Saturday runs are expected to be 82,000 head.

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

(SK)

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