DTN Before The Bell-Livestock

GENERAL COMMENTS

Cattle futures have posted a moderate to strong loss in most contract months early Tuesday morning. An attempt for buyers to move into nearby live cattle trade is struggling following the initial short-covering activity seen in the first few minutes of trade. Hog markets have gained support with triple-digit moves seen in summer contracts. This could help to spark longer-term interest in all lean hog futures. Corn prices are higher in light trade. Stock markets are lower, Dow Jones is 55 points lower while Nasdaq is down 18 points.

LIVE CATTLE:

Open: Mixed. Initial live cattle trade is mixed to mostly lower through early market activity. There is expected to be some additional buyer activity over the next couple of hours in nearby contracts as traders focus on short covering opportunities. The sharp losses seen in all cattle markets Monday were partially influenced by widespread pressure in outside markets. This overall lack of support and the potential that most contracts are pointing lower with follow-through pressure in the market could leave the entire market weak once again. Cash cattle markets remain quiet early Tuesday morning with asking prices and bids still generally undeveloped. The trade activity seen Monday is expected to be tied to basis opportunities and the need for packers to gain access to additional numbers. This posted prices at $190 dressed and $120 per cwt live. At this point it is uncertain if these prices will influence trade later in the week, or if the price levels are focusing on spillover movement last week. It appears that most trade will not develop until late in the week, with a lot of outside market direction also coming into play during early May. Open interest Monday added 1,298 positions (357,612). Spot month June contracts lost 4,628 positions (132,763) and August contracts gained 4,345 positions (112,326). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: $1 to $2 lower. Follow-through pressure has quickly moved into feeder cattle markets with triple-digit losses seen in most contracts in the early minutes of trade. There is likely to be some additional pressure due to concerns surrounding the ability to stabilize live cattle trade through the upcoming week. Cash index for 5/4 is listed at $138.10 up 0.20. Open interest Monday fell 5 positions (44,472).

LEAN HOGS:

Open: Steady to 80 cents higher. Firm buyer support is moving into the lean hog futures complex with traders looking for additional buyer activity to step into the complex over the next few days. The shift from follow through selling to light buyer interest moving into the market seen Monday has helped to potentially change the tone of the market through the month of May. June futures are holding a $1 per cwt gain during early trade, while most other contracts are hovering in a more moderate range from 10 to 80 cents higher. Cash hog trade Tuesday are seen 50 cents lower to $1 per cwt higher. Most bids are steady to firm. Open interest Monday lost 3,327 positions (251,402). Spot month May fell 73 positions (2,273) and June fell 6,069 positions (84,977). Cash lean index for 5/4 is $63.29, up 0.26. DTN projected slaughter for Tuesday is expected to be 465,000 head. Saturday runs are pegged at 43,000 head at the moment.

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

(SK)

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