DTN Before The Bell-Livestock

GENERAL COMMENTS

Light pressure is seen in most livestock futures with cattle markets sluggishly traded in the opening minutes Tuesday morning. The overall lack of direction in the complex could open up the market for the potential of buyer support to move back into the complex, but the concern that increased volatility moving into the market later in the week remains the biggest question. Hog markets are mixed in narrow to moderate trade, as traders look for separation between nearby and deferred market direction over the near future. Corn markets are trading lower in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 2 points lower while Nasdaq is down 5 points.

LIVE CATTLE:

Opening call: Steady to 20 cents lower. Market stability is seen early Tuesday morning as trade volume and interest remains extremely light through much of the morning. The overall lack of market direction within the first few minutes of trade could allow for additional market shifts and could bring about more market activity later in the day. There is a lot of focus on the direction of the overall market through the next couple of weeks, and the ability to stabilize beef values will be crucial in bringing buyer support back into the futures complex. This may spark additional longer term buyer activity over the near future, but for now, most traders remain on the sidelines, still focusing on an underlying bearish market tone. Cash cattle activity remains quiet early Tuesday morning with the focus on the lack of development of bids and asking prices so far this week. It is expected that asking prices will start around $120 to $122 live and $190 to $192 dressed, but it could be midweek or later until active bids are seen and even later before trade develops. Open interest Monday fell 4,775 positions (372,328). Spot August lost 10,135 positions (132,032) and October contracts added 5,449 positions (130,352). DTN projected slaughter for Tuesday is 117,000 head.

FEEDER CATTLE:

Opening call: Steady to 40 cents lower. Light pressure is trickling into the complex early Tuesday morning with the focus on additional longer term market stability after prices came back from strong triple-digit losses and closed with a narrow loss in nearby contracts Monday afternoon. There is expected to be some additional trade activity stepping back into the complex Tuesday, which could bring about increased market support over the next several days. The uncertainty in cash cattle trade and the ability to stabilize beef values through the next couple of weeks may quickly limit market movements in the feeder cattle trade over the next couple of sessions. Cash lean index for 7/7 is $149.98, up $1.81. Open interest Monday added 841 position (58,777).

LEAN HOGS:

Opening call: Mixed. Firm nearby buyer support has moved back into the lean hog futures complex early Tuesday morning following the early week correction which developed Monday. Traders continue to hold firm support in summer contracts, although the recent lack of follow through buyer interest in cash markets is limiting the ability to draw additional strong market interest back into the complex. July contracts remain at contract highs, although the triple digit losses in other contracts Monday have caused traders to question the longer term ability to move prices even higher through the rest of the summer. Light to moderate pressure is seen in nearby contracts, although it is uncertain just how much traction this will gain based on the support in nearby futures and overall light volume. Cash bids are 50 cents lower to 50 cents higher with most bids steady 50 cents higher. Open interest Monday added 2 positions (281,775). Spot month July liquidated 1,042 positions (12,444) and August fell 4,364 positions (82,868). Cash lean index for 7/7 is $92.46, unchanged. DTN projected slaughter for Tuesday is 435,000 head. Estimated runs Saturday are at 25,000 head.

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

(SK)

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