DTN Before The Bell-Livestock

GENERAL COMMENTS

Sharp losses have developed across cattle trade with futures testing limit losses during the early trade. This may create additional pressure through the entire complex over much of the session. Hog futures are under pressure although losses have remained moderate in light volume. Corn markets are trading lower in light trade activity. The stock market is trading lower in light early trade. Dow Jones is 60 points lower while Nasdaq is down 4 points.

LIVE CATTLE:

Opening call: $2 to $3 lower. Aggressive losses have quickly developed in live cattle futures following the bearish cattle on feed report Friday afternoon. The sharp triple-digit losses in feeder cattle markets have also added to the weakness in the live cattle trade and is leaving the market under pressure and creating the potential of limit losses before the day is over. August futures remain $2 per cwt lower, while the rest of the complex is more aggressive with losses from $2.30 to $2.65 per cwt lower as traders remain extremely weak through the complex. There remains uncertainty about short-term support given the increased cattle numbers seen in the market, although expected demand may remain firm over the near future. Cash cattle activity is dead silent early Monday morning following generally steady market moves last week. Show list distribution and inventory taking are the main order of business to be done through the week, which will likely delay bids and asking prices through the next couple of days. Open interest Friday added 1,539 positions (376,969). Spot August lost 5,315 positions (60,777) and October contracts added 2,920 positions (187,060). DTN projected slaughter for Monday is 118,000 head.

FEEDER CATTLE:

Opening call: $3 to $4 Lower. Sharp losses have flooded into feeder cattle trade early Monday morning, which may quickly allow markets to reach limit losses during the morning session. The focus on higher than expected June placements of feeder cattle in feed yards is creating additional short and long term concerns through the entire cattle complex. Feeder cattle futures have moved below $150 per cwt during early trade with traders quickly liquidating positions as markets remain under extreme pressure although the losses in the corn market is giving no relief to the market during the morning. Cash lean index for 7/20 is $149.03, up $1.81. Open interest Friday gained 82 position (60,895).

LEAN HOGS:

Opening call: Steady to $1 lower. Firm follow-through pressure quickly developed through the rest of the complex as aggressive losses quickly moved into cattle trade. This swept selling activity into lean hog futures with most nearby lean hog futures holding losses of $1 per cwt during the first few minutes of trade. Activity through the complex is focusing on market softness in all livestock markets which may limit additional movement through the complex. But this could create some support later in the day given the overall lack of direction in fundamentals. Cash bids are 50 cents to $1 lower with bids scattered through the range. Open interest Friday added 1,580 positions (269,296). Spot month August liquidated 1,893 positions (39,073) and October gained 1,391 positions (116,984). Cash lean index for 7/20 is $91.67, down 0.33. DTN projected slaughter for Monday is 415,000 head.

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

(SK)

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