DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures have traded mostly lower in light trade early Thursday. Traders are looking for additional market shifts, with strong price pressure in cattle markets seen midweek. The potential for short covering exists and could allow the ability to draw some light buyer support to move into the market later in the day based not on market strength, but position taking. Corn markets are trading lower in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 58 points lower while Nasdaq is down 61 points.

LIVE CATTLE:

Opening call: Steady to $1 Lower. Firm losses have been seen early Thursday morning as moderate losses have slowly but consistently stepped back into the complex through the market. This has moved into the market and has continued to erode trade activity during the opening minutes of trade. Even though live cattle futures have extended trading ranges, it appears that for now the trading ranges have been contained to narrow ranges. This will likely keep markets very limited although the overall direction of the markets is likely to remain bearish focusing on weaker fundamentals in the complex. Cash cattle markets remain sluggish early Thursday morning with a few bids slowly developing at $128 per cwt in Texas. A few sales trickled into the market late in the day across Nebraska Wednesday afternoon with prices at $128 to $130 live basis and $205 to $210 dressed, but not enough active trade to establish packers needs for the week. Packer interest is expected to improve through the day with bids likely to improve although it is uncertain just how aggressive packers will be given the overall outlook of the market. Open interest Wednesday liquidated 3,900 positions (409,741). Spot June lost 1,826 positions (10,972) and August contracts fell 2,552 positions (188,265). DTN projected slaughter for Thursday is 115,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1 Lower. Light to moderate follow through pressure continues to move through the feeder cattle market with traders complex with increased pressure developing in the market. Even though triple digit losses are not seen in nearby contracts, the lack of support in early trade activity is still causing traders to remain concerned about follow through pressure in the market. This may bring about additional market losses in all cattle futures as the overall tone of the market remains bearish. Cash lean index for 6/12 is $154.21, up $0.06. Open interest Wednesday liquidated 1,012 position (56,191).

LEAN HOGS:

Opening call: Steady to $1 higher. Firm buyer support is moving back into nearby contracts as strong buyer support has redeveloped in cash trade. This is expected to help bring additional underlying support across the complex. There is likely to bring move the focus back into the front month July contract which taken over as spot month contracts now that June has expired. With July contracts moving above $83 per cwt, the ability for August futures to draw additional buyer support back into the market is also helping to firm support and draw long term buyer activity back into the market. Light pressure is seen in deferred contracts, although there remains limited volume in the opening minutes of trade, which could limit market moves and could keep price levels muted through much of the morning. Cash bids are $1 to $2 higher with bids scattered through the range. Open interest Wednesday gained 415 positions (254,492). Spot month June added 49 positions (11,415) and July lost 1,476 positions (37,243). Cash lean index for 6/12 is $81.16, up $0.57. DTN projected slaughter for Thursday is 435,000 head. Saturday runs are expected at 51,000 head.

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

(SK)

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