DTN Before The Bell-Livestock

Narrow Market Shifts Limit Overall Direction

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

Cattle futures are mostly lower early Wednesday morning, although the overall tone of the complex remains unsettled given the narrow price moves in the cattle complex. Firm follow-through pressure is being closely monitored through most of the complex, as widespread pressure may continue. Corn prices are mixed in light trade. Stock markets are higher, Dow Jones is 49 points higher while Nasdaq is up 51 points.


Open: Mixed. The majority of contracts are holding single-digit price moves early Wednesday morning with very limited movement expected to be seen through the entire complex. The lack of aggressive outside market moves expected through the morning may create a calming effect that could bring additional buyers back into the market over the next several days. Traders continue to focus on strong upcoming holiday demand over the next couple of weeks, but typical summer pressure may be hard to avoid through most of July and August, leaving markets vulnerable to moderate to firm pressure. Cash cattle interest remains sluggish, although there have been a few token bids developing in Kansas at $108 live basis. This could help to draw additional underlying support across the complex and may spark additional interest through the market. The majority of cash trade is expected to be pushed off until the end of the week with a wide gap still seen between bids and asking prices. Open interest Tuesday liquidated 1,223 positions (327,114). Spot month June contracts lost 710 positions (6,602) and August contracts fell 1,624 positions (147,750). DTN projected slaughter for Wednesday is 120,000 head.


Open: 10 to 40 cents lower. Light pressure is slowly trickling into feeder cattle trade as trades seem more interested in adjusting positions following the Tuesday market gains, rather than any additional directional shift developing across the complex. August futures are holding a 25 cent loss, which given the limited trade volume could keep markets generally stable through most of the session. Cash index for 6/18 is listed at $141.48 up 0.20. Open interest Tuesday added 917 positions (45,332).


Open: 50 cents to $1.50 lower. Follow through pressure has slowly developed across the lean hog complex with traders focusing on increased overall weakness in all areas of the hog complex. The swift turn from moderate to strong gains last week to a generally weaker cash market through the first couple days of the week has many traders looking for protection in the futures complex. This could add to additional late-week pressure across most contract months. Cash hog trade Wednesday is steady to $2 lower per cwt. Most bids are $1 lower. Open interest Tuesday liquidated 3,634 positions (235,891). Spot month July fell 4,300 positions (30,160) and August gained 2,380 positions (76,960). Cash lean index for 6/18 is $84.05 up 1.79. DTN projected slaughter for Wednesday is expected to be 446,000 head. Saturday runs are expected at 2,000 with no major packers are slated to run.

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


Rick Kment