DTN Before The Bell-Livestock

GENERAL COMMENTS

Moderate to firm pressure has quickly developed across the cattle complex with front month futures holding losses near $1 per cwt during the opening minutes of trade. Overall trade interest and market volume is expected to remain sluggish over the next couple of hours, which could limit buyer activity in most contract months. Firm buyer support is slowly developing in lean hog trade. This may create additional follow-through support during the rest of the week. Corn markets are trading lower in light trade activity. The stock market is trading mixed in light early trade. Dow Jones is 10 points higher while Nasdaq is down 7 points.

LIVE CATTLE:

Opening call: 50 cents to $1 per cwt lower. Moderate pressure has quickly entered the live cattle market early Tuesday despite very light trade through the entire complex. August futures are leading the move lower with losses at $1 per cwt in the early minutes of trade. But the rest of the complex remains stuck in a narrow trading range as very light trade is seen across the complex with prices 35 to 55 cents per cwt lower. Cash cattle activity remains undeveloped at this point early Tuesday morning with bids and asking prices not yet established. It is likely that asking prices will start out near $115 in the South and $184 to $185 in the North. Active trade is likely to be pushed off until the last half of the week, which could limit overall market direction through the next couple of days. Open interest Monday fell 1,270 positions (310,346). Spot August lost 1,190 positions (9,836) and October contracts fell 1,220 positions (157,660). DTN projected slaughter for Tuesday is 116,000 head.

FEEDER CATTLE:

Opening call: 50 cents to $1.20 Lower. Firm pressure has quickly stepped back into the complex Tuesday morning as traders have countered the early week support which developed in feeder cattle trade. The overall lack of support seen in live cattle futures is starting to create moderate market erosion across the entire complex, although the most aggressive losses remain in 2017 contracts. Front month August futures are leading the initial market pressure with losses of $1.20 per cwt during the opening minutes of trade. Cash lean index for 8/11 is $145.90, down 0.06. Open interest Monday fell 646 position (57,359).

LEAN HOGS:

20 to 80 cents Higher. Firm buyer support has slowly trickled into nearby lean hog futures early Tuesday morning as traders try to add to the late day momentum that developed in nearby contracts Monday. Since August contracts expired Monday, the October futures contract takes over as front month contract, with a price moving above $70 per cwt following a 85 cent per cwt rally. The support across the complex remains firm at this point, although volume remains extremely light, which may limit follow through buyer activity later in the day. Cash bids are steady to $1 lower with most bids steady to 50 cents lower. Open interest Monday added 1,310 positions (269,308). Spot month August liquidated 1,555 positions (8,512) and October added 2,097 positions (121,253). Cash lean index for 8/11 is $84.78, down 0.47. DTN projected slaughter for Tuesday is 445,000 head. Saturday runs are expected to be near 135,000 head.

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

(SK)

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