DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate to firm pressure is quickly redeveloping in cattle futures with traders focusing on continued pressure spilling over from last week. This lack of support in the market may continue to add long term weakness to live cattle and feeder cattle trade through the early part of July. Hog futures are mixed in a narrow range as light activity is seen through the complex. Corn markets are trading higher in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 14 points lower while Nasdaq is down 9 points.

LIVE CATTLE:

Opening call: 30 cents to $1 lower. Firm pressure is quickly developing through the live cattle futures complex as traders have quickly followed the feeder cattle complex lower Monday morning. The stability seen Friday created some calmness in the entire market, but overall concerns of additional pressure in cash markets that may continue to develop and further pressure in the boxed beef complex could add to the already weak live cattle market during the Monday session. Even though trade volume remains light to moderate during the first minutes of trade, follow through pressure may quickly develop across the complex. Cash cattle are expected to remain sluggish through the first half of the week with show list distribution and inventory taking the main agenda of the day Monday. This may keep activity sluggish with bids and asking prices likely to be undeveloped until Tuesday or later. Active trade is likely to be pushed off until the middle of the week. Open interest Friday added 820 positions (376,574). Spot August lost 3,169 positions (141,541) and October contracts added 3,328 positions (124,900). DTN projected slaughter for Monday is 117,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1.50 lower. Firm pressure is seen once again in all feeder cattle futures as traders focus on continued market losses entering the market early in the week. The stability seen late last week helped to draw some underlying market support to the complex, although the combination of fundamental and technical pressure seen in early July may not be enough to keep traders interested through the Monday session. There is expected to be some additional softness likely to develop across the entire cattle market as traders focus on the uncertainty in feeder cattle trade. Cash lean index for 7/6 is $148.19, up $0.35. Open interest Friday fell 209 position (58,016).

LEAN HOGS:

Opening call: Mixed. Lean hog futures remains lightly traded early Monday with early mixed trade focusing on trying to bring a sense of stability back into the complex following the more wide market shifts seen last week. Initial trade is likely to remain stuck in a narrow range as traders try to sort out not only the direction of market moves Monday, but the intensity as to which traders are willing to step into the market over the next several of hours. This could allow for increased market volatility through early week trade, and may bring additional price swings to the entire complex. Cash bids are steady to $1 lower with most bids steady. Open interest Friday added 4,373 positions (281,775). Spot month July liquidated 996 positions (13,500) and August fell 990 positions (87,232). Cash lean index for 7/6 is $92.46, up $0.06. DTN projected slaughter for Monday is 435,000 head.

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

(SK)

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