DTN Before The Bell-Livestock

Narrowly Mixed Shifts Slowly Develop Across Cattle Futures Thursday Morning

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Mixed livestock futures trade has developed in live cattle and lean hog futures following the aggressive cattle buyer support seen midweek. At this point, most traders remain comfortably planted on the sidelines as they look for additional outside market direction and clarity from cash and meat market moves. But the wild shifts seen through the last couple of days may quickly change the tone of the market as live cattle and feeder cattle futures both have expanded trading limits, allowing markets to move in a wider trade range. Corn markets are trading lower in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 8 points higher while Nasdaq is up 10 points.

LIVE CATTLE:

Opening call: Mixed. Initial trade in live cattle futures has posted trade mixed to mostly lower as traders quickly try to position trade activity following the aggressive market surge seen Wednesday. Even though pressure is seen in the live cattle markets, any losses seen in nearby trade has been extremely limited, hovering from 10 to 30 cents per cwt. The overall lack of market direction in the opening minutes of trade could keep markets sluggish through most of the morning. But this could also allow for increased market volatility over the next couple of hours. Cash cattle activity remains quiet early Thursday morning following the light to moderate trade which was seen during the afternoon Wednesday. This trade posted trade as much as $2 per cwt higher in all areas. It is likely that additional business will be desired to be done through the end of the week, although bids are still quiet early Thursday morning. Open interest Wednesday fell 481 positions (371,212). Spot August lost 12,698 positions (108,517) and October contracts added 11,405 positions (150,625). DTN projected slaughter for Thursday is 117,000 head.

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FEEDER CATTLE:

Opening call: Mixed. Buyers are quickly stepping back into the feeder cattle market Thursday morning, although the overall tone of the complex remains generally sluggish given the limit gains which developed midweek. Feeder cattle futures do have expanded trading limits during the Thursday session, which could add to the market volatility in the complex and add even more uncertainty both short and long term to the cattle complex. The moves in futures trade may quickly break away from the market fundamentals, and this could allow for narrow trade volume to drive nearby prices without much additional backing from the rest of the complex. Cash lean index for 7/11 is $148.72, down $0.44. Open interest Wednesday lost 178 position (58,583).

LEAN HOGS:

Opening call: Mixed. Mixed trade is once again seen across the lean hog futures with July futures holding a narrow 5 cent loss at opening bell while light to moderate buyer support is firmly developing in most other nearby contracts. The lack of consistency through the market is expected to keep prices moving in a choppy and somewhat unstable pattern which may keep markets from posting significant market shifts over the near future. Cash bids are steady to 50 cents lower with most bids steady. Open interest Wednesday fell 863 positions (278,660). Spot month July liquidated 638 positions (11,103) and August fell 8,870 positions (65,818). Cash lean index for 7/11 is $92.75, up 0.17. DTN projected slaughter for Thursday is 438,000 head. Estimated runs Saturday are at 34,000 head.

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

(SK)

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Rick Kment