DTN Before The Bell-Livestock

Narrowly Mixed Trade Develops Early Friday

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Narrow trading ranges have developed in all livestock futures early Friday morning with futures limited to single digit price moves in most contract months through the first few minutes of trade. The overall lack of direction in the complex continues to limit market uncertainty as traders focus not only on the long holiday weekend, but also the upcoming cattle on feed report which will be released Friday morning. Corn markets are trading higher in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 22 points lower while Nasdaq is down 3 points.

LIVE CATTLE:

Opening call: Mixed. Narrow trading ranges are expected to be seen through most of the morning as the Friday session is expected to be characterized by lack of market activity and end of the week positioning. The May 1st cattle on feed report will be released early Friday at 11 am due to the holiday weekend. This will likely create additional market shifts in the cattle market trade as the cattle report is typically released after markets close and not able be traded on until next week. But this may create additional pre-positioning as well as post report reaction in the market. Cash cattle activity remains sluggish Friday morning following additional light trade which developed through the North on Thursday. It is expected that most of the trade for the week is likely to be done for the week. Cash cattle trade Thursday was generally $1 per cwt higher than earlier in the week, but still nearly $4 per cwt under last week's average price levels. The market is expected to coast into the holiday weekend. But with the early release of the cattle on feed report, some additional market interest may develop late Friday. Open interest Thursday gained 137 positions (419,012). Spot June liquidated 3,937 positions (42,060) and August contracts added 1,011 positions (192,144). DTN projected slaughter for Friday is 109,000 head.

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FEEDER CATTLE:

Opening call: Steady to 30 cents lower. Light position taking is slowly developing despite the light volume in early feeder cattle trade following the sharp triple digit gains which developed Thursday. There continues to be some increased underlying support in the market as August through October futures are holding 20 to 30 cent losses, even though the tone of the market is expected to remain sluggish through the rest of the morning. Traders will be adjusting positions in front of the cattle on feed report which will be released early Friday because of the holiday weekend. Cash lean index for 5/24 is $143.09, down $0.31. Open interest Thursday fell 197 position (57,555).

LEAN HOGS:

Opening call: Mixed. Lean hog futures have once again opened in a narrowly mixed trading range after holding strong late-day support Thursday and moving to contract highs at closing bell Thursday. Light trade activity is expected to characterize the overall livestock market as well as lean hog trade with trade stuck in a single digit range through the first few minutes of trade. Cash bids are seen 50 cents higher most bids steady. Open interest Thursday added 2,443 positions (234,026). Spot month June lost 1,087 positions (27,040) and July added 717 positions (63,719). Cash lean index for 5/24 is $76.25, up $0.18. DTN projected slaughter for Friday is 425,000 head. Saturday runs are expected to be seen at 5,000.

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

(SK)

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Rick Kment