DTN Before The Bell-Livestock

GENERAL COMMENTS

Cattle markets have posted moderate to firm buyer support early Thursday morning with light trade volume helping to create follow through momentum after the late day Wednesday rally. This could spark some underlying market activity moving back into the complex as traders try to regain trade support through the end of July. There will continue to be increased focus on the direction of cash cattle trade activity and beef values during late morning and early afternoon. Hog markets have pulled back from previous market gains, but the limited market range is indicating the extremely sluggish market activity in the complex. Corn markets are trading higher in light trade activity. The stock market is trading higher in light early trade. Dow Jones is 61 points higher while Nasdaq is up 24 points.

LIVE CATTLE:

Opening call: 50 cents to $1 higher. Moderate buyer support is seen at opening bell in live cattle futures in order to take advantage of the late day rally which developed in the final minutes of trade Wednesday. This could limit additional buyer support through the rest of the morning if additional volume steps into the market and limits the ability for buyers to hold prices at current levels. Cash cattle activity remains extremely quiet early Thursday morning following light to moderate trade which developed Wednesday. Trade was seen in the North at $117 live and $188 dressed and $117 through parts of the South. These prices were generally $2 to $3 per cwt lower. Additional trade is still needing to be done, but it is uncertain if business will resume early Thursday or if market activity will be now delayed until sometime Friday. Asking prices remain at $120 live and $192 dressed, and will likely stay at that level through the day. Open interest Wednesday fell 4,036 positions (368,823). Spot August lost 2,965 positions (50,485) and October contracts fell 1,628 positions (184,396). DTN projected slaughter for Thursday is 119,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1 Higher. Firm buyer support is once again stepping into the feeder cattle futures market early Thursday morning. This movement in the complex is helping to draw additional buyer support due to the already light volume in the complex and narrow market direction seen at the end of the session Wednesday. The cattle market has seen a strong push higher over the last three trading sessions in the first hour of trade. But the inability for follow through support has been unable to hold early gains. This is the concern once again through feeder cattle markets as traders are cautious that early triple-digit gains may quickly erode once additional commercial volume moves into the market. Cash lean index for 7/25 is $151.57, unchanged. Open interest Wednesday added 281 position (60,828).

LEAN HOGS:

Opening call: Steady to 30 cents lower. Narrow losses have trickled into lean hog futures trade early Thursday morning as traders try to adjust positions following the rally higher over the last two trading sessions. Contracts through June of 2018 are holding losses of 10 to 20 cent losses in the opening minutes of market activity Thursday morning, which may continue to limit market movement through the rest of the complex. Narrow trading ranges could define the entire session as traders look for very little additional market direction through the rest of the week from either fundamental or technical factors. Cash bids are steady to $1 lower with most bids steady to 50 cents lower. Open interest Wednesday added 1,165 positions (270,248). Spot month August liquidated 1,263 positions (34,479) and October added 1,187 positions (118,160). Cash lean index for 7/25 is $89.84, down 0.60. DTN projected slaughter for Thursday is 430,000 head. Saturday runs are expected at 63,000 head.

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

(SK)

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