DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed trade continues to hold early Tuesday morning with follow-through pressure seen in live cattle markets. Early support is attempting to develop in deferred feeder cattle trade as buyers have started to move back into the complex following sharp early week losses. This may bring buyers back to the table, but it is uncertain just how deep this support is given the inventory of cattle seen in the cattle on feed report on Friday. Corn markets are trading lower in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 80 points higher while Nasdaq is down 2 points.

LIVE CATTLE:

Opening call: Mixed. Narrow trading ranges have developed early Tuesday morning with follow-through selling pressure seen in most contracts. August futures are holding light gains of 22 cents per cwt although the rest of the contracts are contained in 5 to 20 cent losses. Overall lack of support in the complex could bring additional longer-term pressure based on underlying pressure through the entire cattle market. Cash cattle markets are expected to remain quiet through much of the day Tuesday with bids still undeveloped through much of the first half of the week. It is likely that asking prices will start out at $122 live basis and $192 dressed, although most of the trade volume will likely be pushed off until Thursday or later. Open interest Monday added 755 positions (377,400). Spot August lost 2,725 positions (57,933) and October contracts added 1,582 positions (188,590). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Opening call: Mixed. Position taking appears to be the main agenda early Tuesday morning following sharp losses that developed Monday afternoon. With August futures closing limit lower Monday, feeder cattle contracts will be allowed to trade with expanded trading limits, although at this point it seems that there will be very little interest in any wide market range. Mixed prices are seen in the complex with light activity and prices hovering on either side of unchanged in nearby contracts. More moderate gains are seen in deferred contracts, although even these gains are subdued compared to the pressure developing over the early week session. Cash lean index for 7/21 is $151.88, up $2.85. Open interest Monday fell 311 position (60,571).

LEAN HOGS:

Opening call: Mixed. Light support is slowly developing in nearby contracts as traders are focusing on short covering activity in August and October contracts. August futures posted 50 cent gains which moved prices to near $81 per cwt which continues to help draw underlying buyer support even though cash market support remains weak through the complex. Deferred pressure has stepped into the complex with contracts holding a 10 to 15 cents per cwt as moderate trade seen through the complex. Cash bids are 50 cents to $1 lower with most bids 50 cents lower. Open interest Monday added 1,506 positions (270,740). Spot month August liquidated 2,249 positions (36,822) and October gained 960 positions (117,939). Cash lean index for 7/21 is $91.13, down 0.54. DTN projected slaughter for Tuesday is 440,000 head. Saturday runs are expected at 65,000 head.

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

(SK)

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