DTN Before The Bell-Livestock

GENERAL COMMENTS

Cattle markets have bounced higher as traders are reacting to the sharp losses seen earlier in the week. This move is focusing on the upcoming cattle on feed report and the ability to cover positions at the end of the week. Recent market liquidation is also adding to market shifts through the complex. Hog futures have posted strong pressure although trade remains very light early Friday morning. Corn markets are trading lower in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 21 points lower while Nasdaq is down 5 points.

LIVE CATTLE:

Opening call: Steady to 50 cents higher. Light support is trickling into the market following another bearish round of market weakness that has developed through the week. The end of the week support is not expected to be as much positive market movement as more short covering in front of the cattle on feed report and potential market shifts that could be seen next week. Trade volume is likely to remain extremely sluggish through the rest of the trading day, limiting overall movement through much of the morning. Cash cattle trade appears to be done for the week even though the cattle on feed report will be released after futures markets close Friday afternoon. Trade developed Thursday afternoon with additional activity selling at even lower prices than seen Wednesday. This moved live prices in the South to $119 to $121 per cwt, generally $11 lower than last week, and $196 to $198 dressed. Open interest Thursday lost 2,946 positions (393,423). Spot June lost 1,089 positions (4,445) and August contracts fell 1,173 positions (178,386). DTN projected slaughter for Thursday is 116,000 head.

FEEDER CATTLE:

Opening call: $2 to $3 Lower. Moderate to strong gains have redeveloped through the first few minutes of trade. This is allowing traders to focus on short covering activity at the end of the week. With the June cattle on feed report being released at the end of the day, additional market shifts may develop through the trading session as traders try to adjust for what is expected to be another round of aggressive increased placement levels. Cash lean index for 6/21 is $148.18, up $0.11. Open interest Wednesday added 391 position (55,294).

LEAN HOGS:

Opening call: 50 cents to $2 lower. Late-week pressure is quickly moving into lean hog futures as trades are squaring positions following strong market support and continued fundamental support seen over the last several weeks. With no end in sight expected to be seen pork value support and continued support across the cash hog markets, firm buyer activity may continue to develop long term even though buyers have pulled back from the complex Friday morning. Cash bids steady to $1 higher with most scattered through the range. Open interest Thursday gained 4,772 positions (254,641). Spot month July liquidated 1,415 positions (23,581) and August added 1,920 positions (95,818). Cash lean index for 6/21 is $89.30, up $1.27. DTN projected slaughter for Friday is 417,000 head. Currently no slaughter is expected Saturday.

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

(SK)

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