DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed moves have developed in cattle futures early Friday morning with very light trade volume seen through the entire complex. The same limited trade activity is seen in lean hog futures early in market activity, although prices have posted firm losses through most contracts as traders are starting to focus on fundamental weakness. Corn markets are trading higher 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. Live cattle futures remain sluggish with prices hovering in a very narrow trading range, from 10 cents lower to 5 cents higher. The overall lack of direction in the market is not surprising in the complex given that overall cash cattle trade appears to be done for the week and markets remained generally inactive in futures trade Thursday. The potential for late day market shifts may allow for increased market activity as traders look for long term activity moving into the complex. But there remains a lot of uncertainty about beef demand over the next couple of months. Cash cattle markets are quiet early Friday morning with most of the business for the week expected to have already been done. Moderate trade in the North that developed once again was seen at $190 per cwt dressed basis. This is $2 higher than last week's price levels, but steady with trade earlier in the week. Light trade developed in parts of the South, at $120 per cwt, also $2 higher than last week. Even though some clean-up trade may trickle into the market, overall market activity is not expected to develop through the day. Open interest Thursday gained 1,840 positions (373,047). Spot August lost 13,696 positions (94,808) and October contracts added 13,374 positions (163,999). DTN projected slaughter for Thursday is 117,000 head.

FEEDER CATTLE:

Opening call: Mixed. Feeder cattle futures have traded mixed in a very narrow trading range during the early minutes of activity with the focus on sluggish market pullbacks seen in nearby contracts while follow through buyer support is slowly trying to develop in the deferred contracts. The inability to spark active support to the complex after two consecutive trading sessions of triple-digit gains may lead to sluggish market activity and light volume with traders seemingly coasting into the weekend. Cash lean index for 7/12 is $150.74, down $2.02. Open interest Thursday added 501 position (58,997).

LEAN HOGS:

Opening call: 50 cents to $1 lower. Moderate end of the week pressure is developing through all lean hog futures trade as buyers are stepping back into the complex Friday morning with August futures leading the market lower with a $1.07 per cwt loss. This lack of follow-through support in the complex is helping to limit buyer activity following follow-through pressure in cash markets and potential pullback moves in the pork complex. Sluggish moves are expected to be seen in most contracts through the morning, which may lead to additional market pressure through the end of the week. Cash bids are steady to $1 lower with bids scattered through the range. Open interest Thursday added 294 positions (278,740). Spot month July liquidated 1,241 positions (9,826) and August fell 5,383 positions (60,433). Cash lean index for 7/12 is $92.84, up 0.09. DTN projected slaughter for Friday is 410,000 head. Estimated runs Saturday are at 34,000 head.

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

(SK)

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