DTN Before The Bell-Livestock

Firm Gains Sweep Through Livestock Complex

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Moderate to strong activity is expected to quickly develop through the rest of the morning with firm gains seen across the cattle and hog complex. Cash market activity remains undeveloped in cattle markets while firm follow through support is expected in hog trade. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 55 points higher while Nasdaq is up 33 points.

LIVE CATTLE:

Opening call: Steady to 50 cents higher. Light to moderate buyer activity is starting to redevelop across the live cattle markets as traders are stepping into the market. This is helping to push prices higher with June futures holding a 40 cent gain in the early morning trade. More aggressive gains are seen in August and October contracts with 50 to 60 cent gains. Volume may remain sluggish through the rest of the morning, but could spark increased activity through the rest of the session. Cash cattle markets remain quiet with bids and asking prices are undeveloped at this point of the week. The overall light trade could spark additional movement later in the week, but at this point active trade is likely to be delayed until the last half of the week. Open interest Monday liquidated 1,563 positions (414,068). Spot June liquidated 1,512 positions (13,554) and August contracts fell 1,655 positions (191,979). DTN projected slaughter for Tuesday is 116,000 head.

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FEEDER CATTLE:

Opening call: Steady to $1 higher. Firm gains have developed across the market with $1 gains moving into August through October contracts in the early minutes of trade. Following the triple digit losses, the focus on the pressure seen Monday could allow for short covering activity. This may lead to some midweek market shifts and uncertainty through the entire market complex as traders focus on the direction of live cattle market shifts over the near future. Live cattle trade have moved higher in early trade, but the focus on additional moves in beef values could bring additional support to the entire market. Cash lean index for 6/7 is $154.11, up $1.30. Open interest Monday lost 555 position (57,009).

LEAN HOGS:

Opening call: Steady to $1 higher. Firm buying support has quickly moved back into the lean hog complex following sharp losses which have developed early in the week. The lack of support in the market have allowed for short covering. This may create some additional movement in all markets, and will likely bring about increased long term support through nearby summer contracts that could have long lasting impact to the entire complex. Cash bids are steady $1 higher with most bids $1 higher. Open interest Monday fell 707 positions (251,685). Spot month June lost 1,143 positions (12,827) and July lost 4,807 positions (43,198). Cash lean index for 6/7 is $79.41, up $0.61. DTN projected slaughter for Tuesday is 440,000 head.

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

(SK)

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Rick Kment