DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures have posted light to moderate support across the cattle complex. There is growing uncertainty as to just how much additional support will be seen through the end of the week as volume will continue to erode ahead of the weekend. Corn prices are higher in light trade. Stock markets are lower, Dow Jones is 153 points lower while Nasdaq is down 37 points.

LIVE CATTLE:

Open: Mixed. A combination of follow-through buying is being met with position taking following the strong market support. There is growing activity through the entire cattle market although very little direction is expected to be seen in cash or beef values through most of the morning. Trade volume will likely slow later in the day as traders start exiting the market ahead of the holiday weekend. Cash cattle activity remains quiet early Thursday morning with increased packer interest likely to be seen through the day. Overall trade this week so far has been extremely quiet with just a handful of sales reported in Iowa. This is not enough to establish a market test, leaving prices to focus on late week activity and the ability for bids and asking prices to become more aligned over the next couple of days. Although both sides desire to get business done earlier than later ahead of the holiday weekend, active trade may not be seen until sometime Friday. Open interest Wednesday added 331 positions (359,491). Spot month June contracts lost 2,754 positions (51,263) and August contracts gained 1,429 positions (163,954). DTN projected slaughter for Thursday is 118,000 head.

FEEDER CATTLE:

Open: Steady to 60 cents higher. Firm follow through buyer support has moved into feeder cattle trade early Thursday morning. Traders continue to gain market momentum with commercial buyer activity steadily moving back into the complex through the last half of the week. Even though many traders seem to be content on the sidelines at this point, the focus on expanding midweek gains is helping to spark an overall bullish notion to the entire cattle complex. Cash index for 5/22 is listed at $133.43 up 0.02. Open interest Wednesday fell 303 positions (47,220).

LEAN HOGS:

Open: Steady to 30 cents lower. Early pressure in nearby contracts have quickly backed away from midweek gains. The overall lack of follow through buying activity across the entire complex has caused some underlying pressure through the entire market. Even though losses have been kept in check, the concern that additional weakness may develop through the end of the week in order to challenge recent support levels set early this week. Trade volume is also expected to start slowing as traders prepare for the long holiday weekend. Cash hog trade Thursday is steady to 50 cents lower per cwt. Most bids are steady. Open interest Wednesday added 1,363 positions (243,231). Spot month June fell 5,438 positions (31,363) and July added 401 positions (73,705). Cash lean index for 5/22 is $69.03, up 0.34. DTN projected slaughter for Thursday is expected to be 461,000 head. Saturday runs are estimated at 30,000 head.

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

(SK)

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