DTN Before The Bell-Livestock

Light Activity Allows Buying to Develop

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Moderate to strong buyer support is moving into nearby lean hog trade early Friday morning. The rest of the complex remains sluggish with nearby gains helping to sustain the positive market direction in all livestock trade. Corn prices are higher in light trade. Stock markets are lower, Dow Jones is 47 points lower while Nasdaq is down 17 points.

LIVE CATTLE:

Open: 10 to 80 cents higher. Firm buyer support is moving through the live cattle complex with traders looking for increased overall support across the complex. August futures are holding an 85 cent per cwt gain with increased overall support through the market. Currently nearby contracts are leading the market higher with a 50 to 80 cent gain. This support is not expected to increase overall buyer support in most contracts through the day with many traders focusing more on outside market direction than additional price shifts in cash or beef values. Market activity may slow significantly through the last half of the trading session. Cash cattle interest will need to shift into high gear through the day Friday following lackluster activity through the first four days of the week. Bids Thursday were reestablished at essentially the same levels as seen earlier in the week. This still remains a very wide gap between asking prices and bids. Markets are expected to become more focused through the day, but it may be late in the afternoon before deals are reached. Open interest Thursday liquidated 808 positions (332,662). Spot month June contracts lost 993 positions (13,898) and August contracts slipped 1,951 positions (158,223). DTN projected slaughter for Friday is 118,000 head.

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FEEDER CATTLE:

Open: Mixed. Firm buyer support is seen early Friday in nearby feeder cattle trade. The focus on short-covering opportunities following the pullback in the market Thursday. Narrow to moderate gains of 10 to 30 cents per cwt are seen in nearby contracts are being tempered by narrow losses in early 2019 contracts. It is expected that overall volume through the entire Friday session will remain subdued as traders look for increased overall support to hold, although most traders seem willing to carry most new trade activity into next week. Cash index for 6/6 is listed at $139.65 up 0.44. Open interest Thursday gained 680 positions (44,131).

LEAN HOGS:

Open: Mixed. Early trade is mixed to mostly higher with traders focusing on end of the week buyer support moving back into the complex. This is helping to add triple digit gains to nearby contracts with June and July futures both trading above $1 per cwt higher. Early 2019 contracts continue to hold narrow losses, as end of the week market adjustments seem to be the main focus through the complex during the opening minutes of trade due to very limited volume. It is uncertain just how much trade activity will be seen over the next several hours, but the focus on the market is likely to remain firm. Cash hog trade Friday is 50 cents to $2.00 higher per cwt. Most bids are $1 higher. Open interest Thursday fell 1,605 positions (236,714). Spot month June fell 925 positions (12,620) and July fell 5,961 positions (60,689). Cash lean index for 6/6 is $73.50, up 1.00. DTN projected slaughter for Thursday is expected to be 420,000 head. Saturday runs are expected to be seen at 65,000 head.

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

(SK)

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Rick Kment