DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures are mixed in choppy yet light market activity Tuesday morning. Prices are likely to remain directionless through much of the morning with cattle markets bouncing between narrow gains and losses as buyers and sellers quickly step in and out of the market with very little sense of motivation at this point. Lean hog futures remains mixed to mostly lower as traders continue to focus on current cash market direction. Corn markets are trading lower in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 12 points higher while Nasdaq is down 10 points.

LIVE CATTLE:

Opening call: Mixed. Light trade is slowly developing in live cattle markets as the single digit market shifts have held during the first half hour of trade Tuesday morning. Following the strong market shift higher early in the week, traders seem to have quickly run out of gas as the inability to develop additional commercial activity to the market could unwind market support and quickly erode market gains. Although price positioning may be the main focus through most of the morning, the variable market shifts through the end of the month could create uncertainty by commercial traders and limit overall market direction in the entire cattle market. Cash cattle market activity is quiet early Tuesday morning with bids and asking prices still undeveloped at this point in the week. This is not unusual or unexpected. There could be some asking prices developing through the morning although trade activity is not expected to develop until the second half of the week. The firmness in futures trade could bring a sense of stability to the overall market. Open interest Monday increased 218 positions (421,849). Spot June liquidated 4,368 positions (52,238) and August contracts added 3,430 positions (189,338). DTN projected slaughter for Tuesday is 115,000 head.

FEEDER CATTLE:

Opening call: Mixed. Feeder cattle futures are showing a lethargic start to active trade Monday with the focus on the complex unsettled with most contracts within a narrow market range. There is very little interest seen during the early minutes of trade as traders are looking for position taking. Summer contracts have turned slightly higher with single digit gains, which may draw additional buyer support back into the market over the next couple of hours. Cash lean index for 5/9 is $142.88, down $0.98. Open interest Monday added 849 position (58,080).

LEAN HOGS:

Opening call: Mixed. Narrow price moves have once again developed through lean hog futures as traders have slowly focused on the inability to establish a sense of market direction Tuesday morning. Even though traders seem to have held prices near $80 per cwt price levels in summer contracts, the ability to draw buyers back to the complex at the end of the month has been an extremely challenge even as renewed support has moved into the cattle market early in the week. Traders will not focus on the ability for cash hog price and wholesale pork values to potentially stabilize through the end of the week. This may be the key that brings buyers back into the market over the next couple of days. Cash bids are seen steady to $1 per cwt lower with most bids 50 cents lower. Open interest Monday added 1,319 positions (225,438). Spot month June lost 1,815 positions (29,590) and July added 276 positions (61,835). Cash lean index for 5/19 is $75.89, up $0.34. DTN projected slaughter for Tuesday is 442,000 head. Saturday runs are expected to be seen at 3,500.

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

(SK)

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