DTN Before The Bell-Livestock

GENERAL COMMENTS

Narrow trading ranges have developed early Thursday morning with very light activity seen through the complex. There are expected to be moderate shifts developing through the session as position taking develops following additional fundamental market moves in the complex. Lean hog futures also remain mixed with nearby gains offset by light pressure in deferred contracts. Corn markets are trading higher in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 10 points lower while Nasdaq is down 46 points.

LIVE CATTLE:

Opening call: Steady to 20 cents higher. Narrow trading ranges have developed early Thursday morning. The strong move higher midweek has quickly moved off of last week's lows, and could indicate a market bottom has been set. But the wide ranging market shifts seen so far through the week, strong pressure in beef values and continued softness in cash prices could lead to uncertain market shifts through the end of the week. This may add even more uncertainty through the rest of the day as live cattle futures have bounced higher and lower in a narrow trading range between 20 cents lower and 20 cents higher in the early minutes of trade. The overall lack of support in the complex heading into the end of the month may limit follow through activity. Cash cattle markets remain quiet early Thursday morning following very light activity which developed during the day Wednesday. Prices were seen generally $3 to $5 per cwt lower than last week's levels, which is a pullback from the aggressive double digit losses seen the previous week, but still trending the market lower. Concerns that additional market pressure could add softness to the market depending on movement in beef values and the direction of futures trade could limit cash activity during the session. Open interest Wednesday lost 3,000 positions (383,092). Spot June lost 918 positions (1,060) and August contracts fell 3,782 positions (167,148). DTN projected slaughter for Thursday is 116,000 head.

FEEDER CATTLE:

Opening call: Mixed. Light activity is slowly moving into the feeder cattle market early Thursday morning. Even though initial market moves posted firm losses, this was replaced by buyer support quickly moving back into the complex. The volatility seen during the first half of the week appears to have created a market bottom, allowing for firm buyer support to redevelop across the complex. This may quickly help to instill buyer activity through the market as traders look for increased upward support through the rest of the week and well into the month of July. Cash lean index for 6/27 is $146.86, up $0.44. Open interest Wednesday fell 158 position (56,155).

LEAN HOGS:

Opening call: Mixed. Firm nearby support once again has quickly entered the market allowing for additional buyer support to move back into the complex based on aggressive fundamental support. Even though some concerns are starting to develop at the end of the month surrounding the ability to sustain cash hog values. July futures have moved to new contract highs once again with prices at $88.67 per cwt in opening minutes of trade. Deferred contracts remain slightly lower as traders continue to focus on the potential growing production supplies through the next year which may limit the ability to maintain current price levels long term. Quarterly Hogs and Pigs report will be released Thursday afternoon, creating some positioning through the session. Cash bids steady to 50 cents lower with most bids steady. Open interest Wednesday added 371 positions (257,899). Spot month July liquidated 951 positions (20,027) and August fell 2,908 positions (90,303). Cash lean index for 6/27 is $91.51, up $0.40. DTN projected slaughter for Thursday is 435,000 head. Expected runs for Saturday are currently at 21,000 head.

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

(SK)

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