DTN Before The Bell-Livestock

GENERAL COMMENTS

Early livestock trade is pointing to mostly lower activity with follow through pressure developing across cattle markets. The lack of strong support seen in lean hog trade and uncertainty of firm cash market support is allowing for mixed trade Thursday morning, although trade volumes remain light. Corn markets are trading lower in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 118 points lower while Nasdaq is down 54 points.

LIVE CATTLE:

Opening call: Steady to 80 cents lower. Light to moderate pressure is expected to redevelop through the live cattle futures complex with traders looking for additional softness Thursday following active pressure which developed following the holiday. Even though traders continue to search for stability, the focus in the market continues to be limited to the previous market pressure seen over the last several days. The concern that additional cash market pressure could add even more softness to futures trade through the end of the week may cause steady pressure through the rest of the complex as traders look at 50 to 70 cent losses during the first few minutes of trade in nearby contracts. Cash cattle activity is relatively quiet Thursday morning with just a few scattered bids in Iowa at $188 dressed basis. Packer interest is expected to increase over the next few hours although active trade may be delayed until Friday. Asking prices are seen at $120 to $123 live basis and $190 to $192 and higher dressed. Open interest Tuesday lost 1,508 positions (376,265). Spot August lost 6,377 positions (148,599) and October contracts added 2,864 positions (119,042). DTN projected slaughter for Thursday is 118,000 head.

FEEDER CATTLE:

Opening call: Steady to 50 cents lower. Light follow-through pressure is once again seen across all cattle markets with feeder cattle also testing the waters to see just how much additional pressure may develop through the week. With aggressive triple-digit losses quickly developing across the complex Wednesday, the tone of the market remains extremely bearish, allowing for traders to look for market stability at some point. Short covering may start to develop once the initial wave of selling pressure moves through the market, but it is not expected to bring long lasting strength to the complex at this point. Cash lean index for 6/30 is $147.99, down $1.24. Open interest Tuesday added 672 position (57,945).

LEAN HOGS:

Opening call: Mixed. Lack of direction is seen in lean hog futures early Thursday morning as traders are starting to pull away from recent market gains. The inability for strong follow through support to be seen in all nearby summer contracts has allowed for traders to focus on post-holiday position taking. Initial trade is allowing front month buyer support to redevelop, although the main pressure is seen in August through December contracts in the opening minutes of trade. This could spread to additional pressure through the rest of the session. Cash bids 50 cents lower to $1 higher with most bids steady to 50 cents higher. Open interest Tuesday added 5,792 positions (276,880). Spot month July liquidated 996 positions (15,627) and August fell 538 positions (91,901). Cash lean index for 6/30 is $91.71, down $0.01. DTN projected slaughter for Thursday is 430,000 head. Saturday runs are expected at 190,000 head.

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

(SK)

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