DTN Before The Bell-Livestock

GENERAL COMMENTS

Cattle trade remains extremely weak early Wednesday morning with strong follow-through pressure quickly developing across the entire complex. This has allowed for $1-per-cwt losses to be seen in several nearby contracts as traders look for the focus on market fundamentals during early summer trade to remain weak. Hog markets are firming based on buying support moving into summer contracts once again Wednesday morning. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 28 points higher while Nasdaq is up 10 points.

LIVE CATTLE:

Opening call: 50 cents to $1 lower. Firm pressure has quickly redeveloped through the live cattle futures market as traders focus on follow-through losses Wednesday morning. There is likely to be additional pressure. June futures have posted a 90-cent loss in the opening minutes of trade with prices hovering near $122 per cwt. After being unable to hold recent support over the last two trading sessions, there are major questions if longer-term liquidation continues to be seen leading into the Memorial Day holiday weekend. The weakness in futures trade and recent softness in beef values is pointing to additional pressure mounting in cash values through the week. Cash market activity remains quiet early Wednesday morning with very little interest still seen in bids or asking prices. There is likely to be much more interest through the morning from feeders with asking prices developing in most areas, although bids may not develop until midday or later. Cash cattle trade may start to develop through the end of the day, but more than likely active trade will be delayed until sometime Thursday. Open interest Tuesday fell 974 positions (420,885). Spot June liquidated 2,844 positions (49,345) and August contracts added 1,743 positions (191,140). DTN projected slaughter for Wednesday is 116,000 head.

FEEDER CATTLE:

Opening call: Steady to $1 lower. Follow-through pressure is starting to develop across the complex as traders are adding to the losses which swept through the market Tuesday. Early softness is seen in the August through March contracts with fall contracts testing the $150-per-cwt price levels once again. A move below these levels would spark additional market pressure and could bring about additional liquidation heading into the long holiday weekend. Uncertainty in the live cattle market is creating softness through fundamentals midweek. Cash lean index for 5/22 is $143.27, up $0.39. Open interest Tuesday added 476 position (58,563).

LEAN HOGS:

Opening call: Mixed. Firm buyer support has redeveloped in nearby summer contracts, elevating price levels above the $80-per-cwt price levels as commercial support is moving back into the market. This is helping to draw buyer activity back into the market as traders are quickly advancing above resistance levels and moving to new contract highs. The potential for long-term support and increased fundamental gains continues to draw traders to the market. Weakness is still seen in deferred contracts Wednesday morning, although the overall tone of the market remains firm. Cash bids are seen 50 cents lower to 75 cents per cwt higher with most bids steady to firm. Open interest Tuesday added 2,127 positions (227,560). Spot month June lost 1,197 positions (28,393) and July added 319 positions (62,153). Cash lean index for 5/22 is $75.94, up $0.05. DTN projected slaughter for Wednesday 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)

Copyright 2017 DTN/The Progressive Farmer. All rights reserved.