DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed trade is seen in all livestock trade as traders remain focused on narrowly mixed market direction Monday morning following a wide price swing seen Friday. The firm support in cattle trade and aggressive losses across the hog market have now allowed for very little incentive for traders to step back into the complex at this point with traders slowly keeping prices mixed in a narrow range. Increased volume is likely to develop over the near future, which will likely expand trading ranges through the coming hours. Corn markets are trading lower in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 2 points higher while Nasdaq is up 13 points.

LIVE CATTLE:

Opening call: Mixed. Live cattle markets are trading in a sluggish and directionless trading range similar to the rest of the livestock markets early Monday morning. This lack of movement in the complex is keeping traders from moving prices in either direction with a significant range as traders are looking for longer term market activity and the ability for commercial interest to step back into the market. The potential for additional buyer support to move into the market and move prices above $118 per cwt will help to break through short term highs, but resistance remains as traders continue to focus on seasonal market concerns. Cash cattle markets are expected to remain at a standstill through the entire day with the Monday routine of show list distribution and inventory taking the main focus of the day. There is likely to be additional focus on the early moves in outside markets as well as futures trade, but bids and asking prices are expected to remain undeveloped. Open interest Friday gained 3,178 positions (376,230). Spot August lost 9,896 positions (84,912) and October contracts added 11,060 positions (175,059). DTN projected slaughter for Monday is 116,000 head.

FEEDER CATTLE:

Opening call: Mixed. Light activity is seen Monday morning with traders focusing on initially mixed trade activity through the entire complex. This is allowing traders to focus on prices slowly backing away from firm triple digit gains seen Friday, but the potential for follow-through buyer support was also seen in the early minutes of trade. Trade is hovering from 17 cents lower to 7 cents higher as overall lack of direction is likely to be the main focus through the rest of the complex with traders very concerned about moves in live cattle markets as well as further developments in grain trade through the week. Cash lean index for 7/13 is $149.74, down $1.00. Open interest Friday added 1,092 position (60,089).

LEAN HOGS:

Opening call: Mixed. Sluggish early trade is starting to develop in lean hog futures similar to all livestock markets Monday morning as traders are taking a "wait and see" approach to the market. Early trade during the first few minutes of trade activity Monday have held from 10 cents lower to 7 cents higher with traders unwilling to move significantly in either direction as a follow-up to the aggressive triple-digit losses that developed late last week. Continued pressure is expected to be seen early in cash hog markets, although there is uncertainty as to just how much downward momentum this will place on the overall complex through the entire hog trade. Cash bids are steady to $1 lower with bids scattered through the range but expected to be mostly steady to weak. Open interest Friday lost 2,664 positions (276,054). Spot month July liquidated 760 positions (9,044) and August fell 6,780 positions (53,653). Cash lean index for 7/13 is $92.78, down 0.06. DTN projected slaughter for Monday is 420,000 head.

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

(SK)

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