DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate to strong gains are seen through the entire complex with traders focusing on cattle and hog markets with traders not only adjusting to end of month positions, but also trying to take advantage of fundamental market changes seen in the complex. Lean hog futures are showing strong nearby gains with triple digit support in summer contracts. Moderate support is seen in cattle markets, although the follow through moves continue to bring buyers to the table during the week. Corn markets are trading higher in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 37 points lower while Nasdaq is down 9 points.

LIVE CATTLE:

Opening call: Steady to 50 cents higher. Light trade is slowly developing early Wednesday morning with buyers moving back into the market following early week commercial support. The late-month buyer support seen Tuesday is a reactionary move to the cattle on feed report seen Friday. But continued support through the next couple of days could help to solidify buyer activity and bring additional momentum to the market. June futures have moved to $123.50 per cwt in early trade Wednesday, helping to bring some needed stability to the complex. 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 activity remains generally quiet with a few asking prices developing in the South at $134 to $135 live basis through the morning. Bids are still undeveloped and likely to remain that way through much of the day. Trade will be seen on the Fed Cattle Exchange Auction later in the morning which will likely be the first indication of cash activity for the week. Active feedlot trade may not be seen until sometime Thursday or Friday. Open interest Tuesday gained 1,758 positions (421,650). Spot June liquidated 2,166 positions (36,511) and August contracts added 2,187 positions (197,550). DTN projected slaughter for Wednesday is 116,000 head.

FEEDER CATTLE:

Opening call: Steady to $1 higher. Light to moderate buyer support is expected to draw additional support through the complex with light volume seen Wednesday morning. The wild price swings over the last two trading sessions have allowed prices to move higher and lower within triple digit swings within uncertainty, but the continued firmness seen midweek could help to build additional support back into the market. August futures have pushed prices above $150 per cwt, helping to move prices higher once again. This could spark increased longer term support, and may bring strong commercial interest into all cattle trade through the end of the month. Cash lean index for 5/29 is $145.61, up $0.09. Open interest Tuesday fell 1,678 position (54,964).

LEAN HOGS:

Opening call: 30 to 80 cents Higher. Firm buyer support has quickly moved back into nearby lean hog futures as buyers have shaken off early week pressure that has stepped back into the complex. This lack of movement could quickly help regain market support and push prices back to new contract highs. The overall market strength in all contracts is based on fundamental and technical support as traders may continue to draw support in short and long term market outlooks. June contracts appear to be focusing on expanding to triple digit gains within the first few minutes of trade with increased focus on additional support through the rest of the day. Cash bids are $1 higher with bids scattered through the range. Open interest Tuesday added 1,038 positions (239,000). Spot month June lost 1,843 positions (24,783) and July added 833 positions (65,218). Cash lean index for 5/29 is $76.47, up $0.11. DTN projected slaughter for Wednesday is 440,000 head. Saturday runs are expected to be seen at 220,000.

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

(SK)

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