DTN Before The Bell-Livestock

GENERAL COMMENTS

Light pressure is seen in cattle trade as markets are starting to hold narrow market pressure early Friday morning. Late week positioning is the main focus early in the session, although the attention will soon be squarely placed on cash market activity and markets could quickly move higher and lower several times through the day similar to shifts earlier in the week. Firm gains have redeveloped in hog markets on strong follow through gains. Corn markets are trading lower in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 55 points higher while Nasdaq is up 8 points.

LIVE CATTLE:

Opening call: 50 to 70 cents lower. Light to moderate pressure is slowly developing as late week positioning is starting to be seen across the complex. This may add even more softness to the complex. Nearby summer live cattle futures are holding a 40 to 50 cent loss with traders dipping below the $131 per cwt level in June contracts but light volume is keeping traders unwilling to venture too far from the sidelines. This may keep markets choppy through much of the session as the focus through the day will be centered around the movement in cash and beef values. Cash cattle activity remains quiet early Friday morning following light but higher trade in parts of the North Thursday afternoon in feedlot trade and sluggish live trade in all areas on the Fed Cattle Exchange Auction. The overall tone of the market is expected to remain firm through the day with additional support expected to be developing over the next few hours. Open interest Thursday fell 1,003 positions (413,955). Spot June liquidated 1,227 positions (16,277) and August contracts fell 1,412 positions (193,422). DTN projected slaughter for Friday is 109,000 head.

FEEDER CATTLE:

Opening call: Steady to $1 lower. Follow-through pressure is seen in feeder cattle futures with early pressure seen 50 to 60 cents lower as traders are developing in the initial minutes of trade. This may create additional softness in the entire cattle complex, although at this point it is uncertain just how much selling pressure is behind this market. There continues to be some concern the long term pressure may develop in feeder cattle trade, but without a strong move lower in live cattle trade, the feeder cattle complex will see only limited pressure over an extended period of time. Cash lean index for 6/7 is $154.11, up $1.30. Open interest Thursday added 79 position (57,500).

LEAN HOGS:

Opening call: Steady to 50 cents higher. Light to moderate follow through buyer support is steadily stepping back into the lean hog complex as nearby contracts have quickly moved to new contract highs. This is allowing traders to focus on not only fundamental support, but also the ability to draw technical strength through the complex. There is growing support in pork cutout values through the end of the week which is likely to spark even larger late week gains in the June and July market gains. Cash bids are steady to $1 higher with bids scattered throughout the range. Open interest Thursday added 1,141 positions (249,714). Spot month June lost 2,109 positions (14,871) and July lost 3,449 positions (52,184). Cash lean index for 6/7 is $79.41, up $0.61. DTN projected slaughter for Friday is 415,000 head. Expected runs Saturday are at 28,000 head.

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

(SK)

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