DTN Before The Bell-Livestock

GENERAL COMMENTS

Sharp losses have quickly flooded into cattle futures early Thursday morning with triple-digit losses quickly seen across the complex. This lack of support in the market is leading to increased market pressure and creating even more uncertainty through the entire complex. Lean hog futures are also under pressure as traders are taking protection following aggressive gains seen over the last couple of sessions. Corn markets are trading lower in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 4 points lower while Nasdaq is down 11 points.

LIVE CATTLE:

Opening call: Steady to $1 Lower. Weaker market moves have quickly developed across the complex as traders are stepping into the complex. This has allowed contracts to hold losses of $1 to $1.50 per cwt within the early minutes of trade. The focus on sharp cash market losses and pressure in beef values has once again created even more weakness in the market even though the futures contracts continue to trade at a discount to the cash complex. Cash cattle actively developed Wednesday with trade seen $9 lower than last week as prices were listed at $122 in the South and $196 in the North. There continues to remain uncertainty as to how much additional trade will develop through the rest of the week, but the tone of the market is likely to be set at this point with the expectation that traders may continue to focus on futures price moves seen through the week. Open interest Wednesday lost 2,880 positions (396,882). Spot June lost 975 positions (5,534) and August contracts fell 2,110 positions (180,072). DTN projected slaughter for Thursday is 116,000 head.

FEEDER CATTLE:

Opening call: $2 to $3 Lower. Sharp triple digit losses have quickly developed through the feeder cattle complex Wednesday as traders continue to focus on the increased lack of interest in cash market support through the week. This has led to sharp early morning losses. Even though trade may back away from the initial pressure as more volume moves into the complex, the uncertainty seen in fundamental markets could limit additional support through the rest of the week. Cash lean index for 6/20 is $148.07, down $0.17. Open interest Wednesday added 292 position (55,000).

LEAN HOGS:

Opening call: 30 to 80 cents lower. Light pressure is slowly developing in lean hog trade as position taking is slowly developing across the market. This lack of support is moving into the complex following the surge in front month futures and the aggressive move higher in pork cutout values. It is not unexpected that after such an impressive surge in prices, that traders will focus on market correction for a short period of time. Most of the activity has been focused on nearby summer contracts with little interest shown in deferred contract months. Cash bids are $1 lower to $1 higher with most bids steady. Open interest Wednesday gained 4,593 positions (249,875). Spot month July liquidated 2,028 positions (25,002) and August added 3,123 positions (93,898). Cash lean index for 6/20 is $88.03, up $1.48. DTN projected slaughter for Thursday is 430,000 head. Currently no slaughter is expected Saturday.

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

(SK)

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