DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures are trading under pressure early Thursday morning as outside market factors are causing a significant pull on most markets early Thursday morning. The lack of support in the cash cattle trade seen midweek is as well as expectations of weakness in cash hog trade is also adding to the market concerns through the end of the week. Corn markets are trading lower in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 47 points lower while Nasdaq is up 9 points.

LIVE CATTLE:

Opening call: 70 cents to $1 lower. Moderate pressure has developed through live cattle futures with traders focusing on covering positions from the upward market shifts which developed Wednesday. The sharp pullback in futures trade, as well as the turmoil in the Brazilian real which is likely to leak into other outside markets is also creating some uncertainty through most commodity markets. Live cattle futures have pulled back from initial losses in the first few minutes of trade, but trade is likely to remain moderately volatile through most of the morning although volume will remain light and attention being split between outside markets and fundamental factors during the next several hours. Cash cattle markets are expected to remain sluggish early Thursday morning, although the tone is expected to have been set with early trade starting to trickle into the market midweek with light trade seen around $133 to $135 live basis and $210 to $215 dressed. This is $6 to $10 per cwt lower than last week's price level, which may be the range for the week. Most of the live trade reported were part of the Fed cattle exchange trade, but could create some uneasiness for the rest of the week. Open interest Wednesday increased 2,863 positions (419,187). Spot June liquidated 2,077 positions (64,603) and August contracts added 3,312 positions (176,950). DTN projected slaughter for Thursday is 115,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1.50. Moderate to firm pressure is redeveloping through the entire cattle complex as traders focus on the inability to hold session highs midweek and continued fundamental weakness in cash cattle trade which is likely to continue through the week. Early trade in most feeder cattle markets is holding losses of $1 per cwt due to extremely light volume. The potential that additional market shifts could develop may bring great volatility during the morning. Cash lean index for 5/16 is $142.12, down $0.08. Open interest Wednesday added position (57,321).

LEAN HOGS:

Opening call: 20 to 60 cents lower. Early selling pressure quickly swept into lean hog futures markets as the focus of trader's inability to move through resistance levels of $80 per cwt during the Wednesday trading sessions while has brought about a fresh round of light liquidation into the entire complex. All contracts have turned lower as news of outside market pressure is adding to the market weakness as traders remain concerned about not only domestic market pressure, but the impact of pork demand on export markets due to global markets. Cash bids are steady to 50 lower with most bids steady. Open interest Wednesday added 1,086 positions (221,838). Spot month June lost 2,973 positions (34,832) and July added 1,562 positions (60,999). Cash lean index for 5/16 is $74.14, up $1.13. DTN projected slaughter for Thursday 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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