DTN Before The Bell-Livestock

Firm Gains Redevelop Across Cattle Trade Friday Morning

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

Live cattle futures have bounced higher with traders quickly reacting to the sharp losses which developed Thursday. The cattle market has been in reactionary mode most of the week with prices shifting back and forth between aggressive gains and losses each trading session. There will be increased focus on cash market direction through the end of the session as well as the release of the cattle on feed report. Hog markets remain mixed with firm gains in nearby contracts leading the complex higher. Corn markets are trading lower in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 94 points lower while Nasdaq is down 11 points.

LIVE CATTLE:

Opening call: Steady to 50 cents higher. Firm gains have developed in early live cattle trade Friday morning with the focus on additional market support from feeder cattle futures. The reaction of buyers quickly moving into the market as they square positions following sharp triple-digit losses Thursday is also creating more volatility in the lightly traded morning market. Traders will focus on the development of beef values and cash markets through the end of the morning as well as overall cattle on feed numbers released in the afternoon report. This could keep traders moving in a choppy pattern over the next several hours. Cash cattle markets are quiet early Friday morning with bids undeveloped at this point. It is expected that packer interest will develop through the morning as trade will need to be done in all areas through the day. But it could be an afternoon affair as traders wait for the release of the cattle on feed report. Open interest Thursday added 405 positions (375,717). Spot August lost 3,434 positions (66,181) and October contracts added 420 positions (184,187). DTN projected slaughter for Friday is 119,000 head.

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FEEDER CATTLE:

Opening call: Steady to $1 higher. Moderate to strong buyer support is quickly moving into the feeder cattle market early Friday morning as traders once again react to the sharp triple digit losses seen Thursday. The week has been filled with back and forth price shifts within a very wide trading range. But the inability to break out of these ranges may keep markets in the current pattern over the near future. Cash lean index for 7/19 is $147.22, down $1.94. Open interest Thursday gained 480 position (61,308).

LEAN HOGS:

Opening call: Mixed. Even though trade remains mixed early Friday morning, prices have opened in a wider range than has been seen over the last several days. This is allowing for additional buyer activity to move back into nearby contracts as August through December contracts are holding gains of 30 to 50 cents per cwt through the first few minutes of trade. The overall lack of support in deferred futures is pulling back on previous market gains, but the trading range remains narrow. Cash bids are steady to $1 lower with most bids steady to 50 cents lower. Open interest Thursday lost 4,931 positions (267,746). Spot month August liquidated 3,388 positions (40,967) and October gained 2,013 positions (115,593). Cash lean index for 7/19 is $92.00, down 0.40. DTN projected slaughter for Friday is 425,000 head. Projections for Saturday remain at 50,000 head.

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

(SK)

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Rick Kment