DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm buyer support is moving back into the livestock market Tuesday with activity starting to shift higher as front month live cattle and lean hog markets are holding gains above $1 per cwt. This support is able to not only bring increased commercial activity back into the market, but also sustain the firm bullish momentum seen through the market. Corn markets are trading higher in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 32 points lower while Nasdaq is down 2 points.

LIVE CATTLE:

Opening call: Steady to $1 higher. Sluggish trade slowly developed early Tuesday morning, but buyers stepped back into the market as more volume appears to be moving back into the complex. The focus on setting new contract highs during early June as well as pushing beef values higher is helping to stimulate additional buyer support across most trade activity. June futures are currently the only market holding triple-digit gains, but the support in front-month futures is likely to spark some additional activity later in the morning. Cash cattle markets remain generally quiet early Tuesday with just a handful of token bids starting to develop in the North at $216 per cwt. Asking prices are not established in either the North or the South but should start to develop through the day. Even with bids and asking prices more evident, this may not bring about active trade until midweek or later. Open interest Monday liquidated 2,310 positions (414,195). Spot June liquidated 2,133 positions (20,173) and August contracts fell 1,817 positions (197,023). DTN projected slaughter for Tuesday is 114,000 head.

FEEDER CATTLE:

Opening call: Mixed. Nearby contracts have posted moderate support through the complex with August markets focusing on follow through support and moving to new contract highs in the early minutes of trade. The focus across the complex remains based on August futures holding prices above $160 per cwt and the ability to bring additional commercial and investment interest back into the complex. This may help to stimulate additional long term live cattle activity, but for now, position taking is seen in deferred contracts following the aggressive triple-digit rally seen Monday. Cash lean index for 6/1 is $149.80, up $2.69. Open interest Monday added 1,002 position (56,893).

LEAN HOGS:

Opening call: Mixed. Buyers have quickly stepped back into the complex with front-month June futures pushing prices back above $81 per cwt in the opening minutes of trade Tuesday. This is creating some follow through support as traders are covering short positions following the early-week pressure which quickly developed. Although trade volume remains extremely light, the tone of the market is turning much more positive Tuesday as traders are focusing on the fundamental support still evident in the market. Cash bids are steady to $1 higher with most bids steady to firm. Open interest Monday fell 637 positions (245,658). Spot month June lost 1,140 positions (17,819) and July lost 2,132 positions (62,265). Cash lean index for 6/1 is $77.34, up $0.55. DTN projected slaughter for Tuesday is 440,000 head. Expected runs Saturday are currently listed at 28,000 head.

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

(SK)

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