DTN Before The Bell-Livestock

Strong Pressure Developing Through Cattle Trade

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

Strong reactive selling has quickly moved into cattle trade. This is adding even more uncertainty through the complex as traders focus on backing away from the late-week gains seen Friday. Corn prices are lower in light trade. Stock markets are lower, Dow Jones is 265 points lower while Nasdaq is down 41 points.


Open: 60 to 90 cents lower. Following the near-limit gains seen Friday, traders are quickly adjusting positions and squaring positions. This may add even more uncertainty to the complex as traders are looking for increased pressure through the rest of the market. There may be some additional volatility through the market, but for now the most aggressive losses are seen in deferred contracts, which are holding the lightest trade activity at this point. Cash cattle activity is expected to remain sluggish early in the week with show list distribution and inventory taking the main focus early Monday. The fact that trade remained sluggish all last week may keep packers looking to secure additional numbers. But the lower prices is leaving feedlot managers less than anxious to make additional deals in the current range. Open interest Friday liquidated 3,095 positions (330,514). Spot month June contracts lost 1,221 positions (7,710) and August contracts fell 1,377 positions (151,387). DTN projected slaughter for Monday is 119,000 head.


Open: $1 to $1.50 lower. Firm pressure has moved into the cattle complex with traders quickly backing away from the aggressive price shift seen Friday. This could add even more uncertainty to the complex as deferred contracts are leading the market losses. It is expected that volume will remain sluggish over the near future, but could spark some additional volatility through the rest of the day. Cash index for 6/14 is listed at $140.73 up 0.03. Open interest Friday fell 744 positions (44,637).


Open: 30 cents to $1 higher. Renewed buyer support has moved back into the complex with traders looking for increased overall support through the complex and additional potential buying in the spot month July contacts. This has pushed July futures $1 per cwt higher in the opening minutes of trade, although limited volume is keeping most other traders unwilling to quickly move back into the market through early trade. Cash hog trade Monday is steady to $1 higher per cwt. Most bids are steady. Open interest Friday fell 1,709 positions (235,491). Spot month July fell 3,054 positions (38,351) and August fell 327 positions (38,351). Cash lean index for 6/14 is $81.44, up 1.35. DTN projected slaughter for Monday is expected to be 430,000 head.

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


Rick Kment