DTN Before The Bell-Livestock

GENERAL COMMENTS

Cattle markets remain under pressure early Friday morning with traders focusing on late-week short-covering following the market adjustments that have quickly developed through the last couple of days. Trade volume is expected to remain extremely light through much of the session, leaving markets vulnerable for additional market swings at the end of the month. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 101 points higher while Nasdaq is up 4 points.

LIVE CATTLE:

Opening call: 50 cents lower. Moderate pressure is seen in live cattle trade early Friday morning with traders focusing on the building pressure in feeder cattle markets and concern that end of week and month market shifts may bring some added market volatility to the complex. June futures remain extremely lightly traded due to the light open interest trade, putting most of the emphasis on August contracts, and ability to hold $116 per cwt through the end of the week. A move below this level through early July could spark additional market pressure and limit additional commercial support over the near future. Cash cattle activity remains quiet early Friday morning following light to moderate trade in most areas Thursday. The expectation is that most of the needed business is likely done for the week, although some clean up trade may develop through the end of the day. Prices have been seen at $119 in the South which is $3 lower than last week, and $189 to $190 in the North, $4 to $5 lower. Open interest Thursday lost 1,872 positions (381,215). Spot June lost 834 positions (226) and August contracts fell 2,984 positions (164,159). DTN projected slaughter for Friday is 117,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1 lower. Moderate pressure is quickly moving into the feeder cattle futures complex as traders focus on closing out the month of June. Front-month August contracts are holding a $1.22 per cwt loss, with contracts holding price values of $146.12 per cwt during the early minutes of trade. The overall lack of support in the market is more focused on end-of-month and pre-holiday market interest than anything else at this point. Cash lean index for 6/28 is $148.70, up $1.84. Open interest Thursday added 1 position (56,156).

LEAN HOGS:

Opening call: 50 cents to $1 higher. Aggressive buyer support quickly stepped back into the lean hog futures complex on the last trading session of June. Even with strong hog number gains seen in the hogs and pigs report Thursday, traders continue to focus on market support as the report came in near expectations in most areas. This allowed additional nearby buyer activity to quickly develop late in the week, and push front-month July futures above $90 per cwt. August futures have also now moved to new contract highs with prices $2 per cwt higher in early trade, moving to $82.80 per cwt Friday morning. Firm support is seen in most deferred contracts late in the week based on expected longer-term market expectations. Cash bids $1 lower to $1 higher with most bids steady to 50 cents higher. Open interest Thursday added 2,576 positions (260,479). Spot month July liquidated 403 positions (19,622) and August fell 215 positions (90,091). Cash lean index for 6/28 is $91.66, up $0.16. DTN projected slaughter for Friday is 420,000 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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