DTN Before The Bell-Livestock

Firm Hog Buying Develops

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

Firm gains in nearby lean hog futures seem to be lost on the rest of the complex with prices mixed in cattle and hog trade. The expectation is that overall trade will remain sluggish through most of the morning, potentially allowing current market support to hold across the complex in lean hog and feeder cattle trade. Corn prices are lower in light trade. Stock markets are higher, Dow Jones is 6 points higher while Nasdaq is up 12 points.

LIVE CATTLE:

Open: Mixed. Extremely light and narrow trading ranges are seen early Wednesday morning. Prices are hovering from 12 cents lower to 15 cents higher in early market activity with no significant direction expected over the next couple of hours. Traders are focusing on both the direction in cash markets through the rest of the week, but also paying close attention to outside market direction and the overall potential to spark increased activity from both commercial and investment traders. Cash cattle remain quiet early Wednesday morning following another day of trade at a standstill. Although it is expected that some bids will be redeveloped over the next few hours, it is not expected that these bids will deviate from levels seen Tuesday. This should not get feedlot managers excited at this point. Active trade is expected to be delayed until late in the week once again. Open interest Tuesday gained 677 positions (331,592). Spot month June contracts lost 489 positions (10,961) and August contracts slipped 1,336 positions (153,446). DTN projected slaughter for Wednesday is 120,000 head.

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FEEDER CATTLE:

Open: Steady to 30 cents higher. Short covering swept through the complex early Wednesday with very little momentum expected over the near future. Prices have held narrow to moderate gains just after opening bell, but this is focused on offsetting a portion of the losses seen Tuesday. It is uncertain just how much buyer support will develop through the morning as limited activity in live cattle trade could quickly cool market interest. Cash index for 6/11 is listed at $140.95 up 0.34. Open interest Tuesday added 69 positions (44,125).

LEAN HOGS:

Open: Mixed. Firm gains have developed in nearby lean hog futures in the opening minutes of trade. Support of 50 to 90 cents per cwt have been seen in summer contracts. The short-term support is based on expected aggressive price shifts in cash markets as overall market fundamentals continue to be supported. This buyer support is currently lost on deferred contracts, currently holding steady to 10 cents lower in very limited activity. The buyer support may help to spark increased influence through the rest of the complex. Cash hog trade Wednesday is steady to $3 higher per cwt. Most bids are $1 higher. Open interest Tuesday added 2,694 positions (235,340). Spot month June fell 658 positions (10,228) and July fell 4,226 positions (49,388). Cash lean index for 6/11 is $77.18, up 1.39. DTN projected slaughter for Wednesday is expected to be 450,000 head. Saturday runs are expected to be seen at 23,000 head.

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

(SK)

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Rick Kment