DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures remain mostly lower following strong market losses in cattle trade as traders are looking for increased trade weakness through the feeder cattle and live cattle complex. There is likely to be increased additional pressure developing through the morning which may add to the uncertainty during the week. Corn markets are trading higher in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 47 points lower while Nasdaq is down 5 points.

LIVE CATTLE:

Opening call: Steady to 50 cents lower. Light to moderate pressure is slowly starting to develop across the live cattle complex with traders following the overall lack of support in the feeder cattle market. This lack of support in the cattle trade follows the inability for buyers to step back into the complex after late last week's market support. There is increased support that may continue to develop over the near future, but the lower price levels could quickly limit any additional buyer activity from moving into the market during the morning. Cash cattle interest is still undeveloped with bids and asking prices remain quiet Tuesday morning. The best guess is that cattle will be priced at $122 and higher live basis and $192 and higher dressed. But active trade is likely to be delayed until after the middle of the week unless a significant shift is seen in futures or beef market activity over the next couple of days. Open interest Monday gained 1,481 positions (377,371). Spot August lost 7,451 positions (77,329) and October contracts added 7,577 positions (82,578). DTN projected slaughter for Tuesday is 116,000 head.

FEEDER CATTLE:

Opening call: Steady to $1 lower. Moderate pressure stepped into the cattle market early in the market Tuesday morning, but this lack of buyer interest quickly started to develop additional selling activity which quickly led to triple digit losses in all contract months. This pressure could lead to potentially sharp losses during the morning, but the early lack of volume may limit the consistency of trade activity during the session as traders could move prices back and forth through the rest of the session. Cash lean index for 7/14 is $148.61, down $1.13. Open interest Friday fell 36 position (60,031).

LEAN HOGS:

Opening call: Steady to 40 cents lower. Light pressure is slowly developing through lean hog futures trade early Tuesday morning with the lack of support once again seen in cash markets limiting support through the complex. With July futures now off the board, August remains front month contracts with the price of $80 per cwt. This creates a significant shift in price levels when only focusing on continuous charts, which may limit some underlying support early Tuesday morning through the complex. Narrow trading ranges are expected to be seen following the initial early trade seen through the complex, which may bring about increased buying later in the session. Cash bids are steady to $1 lower with most bids expected to remain steady to 50 cents lower. Open interest Monday lost 394 positions (275,610). Spot month July liquidated 509 positions (8,523) and August fell 2,530 positions (51,119). Cash lean index for 7/14 is $92.50, down 0.28. DTN projected slaughter for Tuesday is 430,000 head.

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

(SK)

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