DTN Before The Bell-Livestock

Sharp Pressure Develops In All Livestock Trade

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

Strong losses have developed in livestock trade with very limited support seen across the cattle or hog markets. Additional uncertainty seems to be seen in most other markets as traders balance outside market direction with market fundamentals. Corn prices are lower in light trade. Stock markets are lower, Dow Jones is 375 points lower while Nasdaq is down 89 points.


Open: 60 cents to $1.50 lower. Firm losses have quickly moved back into the complex with traders looking for increased direction. Buyers have been incredibly silent through the morning following the inability to show any sense of direction in the market in the Monday session. Traders are starting to focus on last week's pressure in cash markets as well as concerns that beef values may have a hard time showing strong gains through the rest of the month. This could keep prices under pressure through most of the session. Cash cattle trade is still undefined with cash bids and asking prices not fully defined. Bids are likely not to be actively seen until midweek or later, while asking prices are expected to start around $115 live basis. It is expected that trade may not develop until late in the week once again. Open interest Monday liquidated 1,749 positions (328,567). Spot month June contracts lost 392 positions (7,312) and August contracts fell 1,822 positions (149,487). DTN projected slaughter for Tuesday is 120,000 head.


Open: $1 to $1.50 lower. Additional early pressure is seen in feeder cattle trade. Although traders point to the fact that markets regained early losses Monday, and this could be early session positioning, the tone of the market is much more subdued at this point, with traders concerned that additional market shifts could develop as traders start to back away from the complex. Cash index for 6/15 is listed at $141.28 up 0.55. Open interest Monday fell 190 positions (44,429).


Open: $1 to $1.50 lower. Triple-digit losses have quickly developed through the lean hog futures complex, as traders have started to back away from the strong market surge higher seen over the last couple of weeks. This may spark some underlying position taking through the next couple of days, although the growing concern surrounding the ability to keep moving pork supplies through the pipeline may be a bigger concern over the next several weeks. Cash hog trade Tuesday is steady to $1 lower per cwt. Bids are scattered through the range. Open interest Monday added 465 positions (235,891). Spot month July fell 3,880 positions (34,464) and August gained 3,500 positions (74,587). Cash lean index for 6/15 is $82.86 up 1.26. DTN projected slaughter for Tuesday is expected to be 436,000 head. No major packers are slated to run Saturday.

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


Rick Kment