DTN Before The Bell-Livestock

GENERAL COMMENTS

Light to moderate losses are slowly developing in cattle futures Friday morning. Position squaring is starting to be seen following the Thursday gains which developed in the live cattle and feeder cattle trade, although volume in all contracts remain extremely light. Hog markets remain mixed in sluggish trade which could limit additional market activity and could create additional market direction at the end of the week. Corn markets are trading mixed in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 15 points lower while Nasdaq is down 13 points.

LIVE CATTLE:

Opening call: 20 cents to 50 cents lower. Narrow market softness is slowly trickled into the complex early Friday with initial support very limited following the inability for live cattle futures to follow the aggressive triple digit rally seen in the feeder cattle trade. It is expected that overall trade volume will remain sluggish through most of the session, which will likely limit trade volume and keep prices in a narrow trading range through most of Friday. Cash cattle markets remain quiet early Friday morning, although bids may start to redevelop later in the morning. It would not be surprising if additional trade develops before the end of the week as trade over the week seems to have developed in dribbles and drabs. Even though additional sales may develop, it is likely that the overall tone has been set with prices likely to remain near $117 live and $188 dressed unless there is a significant market shakeup seen in futures trade. Asking prices are expected to hold at $118 to $120 live and $190 dressed. Open interest Thursday fell 2,936 positions (365,494). Spot August lost 2,620 positions (47,602) and October contracts fell 861 positions (183,476). DTN projected slaughter for Friday is 114,000 head.

FEEDER CATTLE:

Opening call: 30 cents to 50 cents lower. Light market pressure is slowly developing in feeder cattle futures as traders are looking for additional short term position taking following the triple-digit gains which developed Thursday. The overall tone of the market remains relatively unstable at this point, but there still remains some concern about just how much additional support will redevelop over the near future through the end of the month and first couple weeks of August. Traders are also closely watching grain market direction as overall cost of production continues to be a significant factor and will affect overall market direction through the next couple of months. Cash lean index for 7/26 is $151.30, down 0.30. Open interest Thursday added 616 position (61,241).

LEAN HOGS:

Opening call: Mixed. Light trade is seen early Friday morning as traders continue to focus on narrow trading ranges following the overall lack of direction in the complex late over the last couple of trading sessions. Nearby contracts have been able to hold narrow gains in the opening minutes of trade with support of 2 to 20 cents per cwt while moderate pressure is slowly developing in deferred contracts as traders are taking protection in front of the weekend. Light trade is expected to be seen through the entire complex, but most traders are closely watching outside market activities for additional market movement. Cash bids are steady to $1 lower with most bids steady to 50 cents lower. Open interest Thursday lost 71 positions (270,113). Spot month August liquidated 1,546 positions (32,928) and October added 737 positions (118,887). Cash lean index for 7/26 is $89.39, down 0.45. DTN projected slaughter for Friday 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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