DTN Before The Bell-Livestock

GENERAL COMMENTS

Early trade in all livestock markets remains mixed with traders focusing on position taking and short covering activity following the weekend break. The wide price shifts in cattle markets are creating some major opportunities for traders to square positions early Monday morning while still trying to adjust for the week and month ahead. Hog traders are trying to adjust positions with bullish fundamentals ahead. Corn markets are trading higher in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 12 points lower while Nasdaq is up 3 points.

LIVE CATTLE:

Opening call: Steady to 50 cents lower. Light to moderate pressure is stepping into the live cattle complex following the aggressive gains which developed late last week. June futures which closed $3.40 per cwt higher are taking some protection similar to all other nearby contracts pulling back from prices over $130 per cwt. This could allow for additional choppy price moves through morning trade as markets try to find some stability over the near future with commercial and investment traders really trying to find a sense of long and short term market direction through the next couple of weeks. The price spreads between nearby and deferred contracts remain wide with a $5 to $6 per cwt gap. 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 markets are quiet early Monday with show list distribution expected to be the main order of business through the morning. Asking prices and bids are not expected to be seen through much of the day and may not develop until midweek. Open interest Friday liquidated 9,949 positions (420,561). Spot June liquidated 8,657 positions (26,357) and August contracts fell 3,760 positions (198,840). DTN projected slaughter for Monday is 116,000 head.

FEEDER CATTLE:

Opening call: Mixed. Narrow losses have trickled into nearby contracts as traders are taking profits following the triple digit gains after last week. The rally well above $150 per cwt near $160 per cwt has allowed traders to take some breathing room although there seems to be some additional buyer support still remaining in the cattle market during early June. Cattle trade may remain choppy through the Monday morning session, although prices may not be able to find support over the near future. Cash lean index for 6/1 is $149.80, up $2.69. Open interest Friday added 850 positions (55,891).

LEAN HOGS:

Opening call: Mixed. Lack of consistency is seen early morning Monday as traders continue to move prices in a narrow trading range following the lack of direction seen late last week. Given the market moves seen last week where prices posted strong market gains, and held above $81 per cwt but were unable to bring additional buyer support above these levels due to lack of renewed commercial buyer support in futures trade of interest in the cash market, buyers seem to be taking a more stable approach early in the week. But this is far from a weaker market as traders could hold this pattern through the early part of June and may remain stable over the coming days, just above the $80 per cwt leave in summer contracts. Cash bids are 50 cents lower to $1 higher with most bids steady to firm. Open interest Friday fell 39 positions (246,295). Spot month June lost 1,884 positions (18,959) and July lost 1,552 positions (64,397). Cash lean index for 6/1 is $77.34, up $0.55. DTN projected slaughter for Monday is 440,000 head.

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

(SK)

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