DTN Before The Bell-Livestock

GENERAL COMMENTS

Active buyer interest is seen across the entire livestock market Thursday morning. This is helping to bring additional price support to both cattle and hog futures. Even though prices have been contained to moderate gains, there is still some additional longer term support that may still move back into the complex over the next several days and weeks based on the active commercial support seen through the market and fundamental support building in the market. Corn markets are trading higher in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 4 points lower while Nasdaq is down 2 points.

LIVE CATTLE:

Opening call: 50 to 70 cents higher. Light to moderate buyer support is slowly developing across the complex. There remains expectations of firm fundamental support from both strong beef values and cash market support at the end of the week, which is helping to keep commercial buyers active in the market. There is additional support seen in all nearby contracts which is helping to build consistency through the entire complex. Cash cattle markets are quiet early Thursday morning with bids and asking prices expected to become more evident as the morning continues. The Fed Cattle Exchange Auction was postponed Wednesday due to technical difficulties and will take place at 10 am on Thursday. It will be interesting to see how this will not only impact the overall participation level of the FEC trade but also affect overall feedlot trade since it is later in the week. Open interest Wednesday added 244 positions (414,956). Spot June liquidated 674 positions (17,501) and August contracts fell 1,854 positions (194,835). DTN projected slaughter for Thursday is 116,000 head.

FEEDER CATTLE:

Opening call: Steady to $1 higher. Firm buyer support has moved back into feeder cattle futures based on the ability to quickly draw buyer interest back into live cattle markets. August and September live cattle futures are leading the morning rally with 90 cent gains, and moving prices above the $155 per cwt level once again. After the strong correction seen Tuesday, additional commercial buying support may redevelop across the market which could step back into the complex. Cash lean index for 6/6 is $152.81, up $0.22. Open interest Wednesday fell 34 position (57,421).

LEAN HOGS:

Opening call: Steady to $1 Higher. Firm buyer support is expected to redevelop in lean hog futures early Thursday morning based on firm support in cash and pork values. The underlying support across the complex continues to drive buyer support higher and early gains have moved summer contracts to or above the $82 per price levels once again. This support may help to spark additional longer term buyer activity through the end of the week which may instill longer term bullishness through the entire lean hog complex. Cash bids are steady to $1 higher with bids scattered throughout the range. Open interest Wednesday fell 764 positions (248,571). Spot month June lost 365 positions (16,982) and July lost 5,355 positions (55,635). Cash lean index for 6/6 is $78.80, up $0.60. DTN projected slaughter for Thursday is 440,000 head. Expected runs Saturday are at 28,000 head.

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

(SK)

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