DTN Before The Bell-Livestock

Light Pressure Develops in Cattle Futures

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

Cattle futures are holding moderate losses although trade volume remains sluggish. Traders are looking for increased direction through the rest of the week as cash cattle trade is essentially undeveloped despite the limited activity seen Wednesday. Corn prices are higher in light trade. Stock markets are lower, Dow Jones is 114 points lower while Nasdaq is down 8 points.


Open: steady to 50 cents lower. Live cattle futures have eroded moderately in early trade as buyers have stepped back away from the market at this point. There is increased activity through the complex with most contracts holding losses near 50 cents per cwt. The lack of direction through the morning in both fundamental markets and outside trade seems to be allowing for the most recent market adjustements. Cash cattle markets are still quiet Thursday morning. The light trade seen in the North Wednesday is not expected to be enough to set the tone of the market, but traders seem to be extremely cautious given the choppy moves in outside markets and livestock futures. Bids are expected to redevelop through the morning, although at this point, asking prices remain firm at $115 live basis and $183 and higher dressed. It is not unlikely that active trade will be pushed off until sometime Friday. Open interest Wednesday liquidated 801 positions (326,130). Spot month June contracts lost 846 positions (5,756) and August contracts fell 1,651 positions (146,030). DTN projected slaughter for Thursday is 119,000 head.


Open: 40 to 80 cents lower. Limited activity is seen as cattle markets open Thursday. The pullback from narrow market gains midweek is not expected to give any significant direction to the market over the next couple of days. With nearby contracts trading at the highest level since March as of midweek, there is expected to be some market positioning even if follow through support does develop through the end of the month. Traders are finding it harder to push prices higher the closer price levels get to $150 per cwt as physiological market factors seem to be a main focus through the market. Cash index for 6/19 is listed at $141.41 down 0.07. Open interest fell 112 positions (45,220).


Open: Mixed. Narrow trading ranges have developed early Thursday morning. Front-month July futures have posted a 50-cent-per-cwt gain as traders try to adjust from sharp triple-digit losses seen Wednesday. The rest of the complex is holding losses of 20 to 70 cents per cwt with most nearby contracts hovering from 20 to 30 cents per cwt. There is increased focus on trying to rebuild market consistency after taking out the gains seen over the last month. This abrupt change in market direction is leaving the entire complex very unsettled with traders not only focusing on the potential shifts in supply over the coming weeks, but the concern of domestic and export demand changes could add even more concerns to the entire hog market. Cash hog trade Thursday is steady to $1 lower per cwt. Most bids are $1 lower. Open interest Wednesday liquidated 3,292 positions (225,795). Spot month July fell 2,932 positions (27,227) and August gained 57 positions (76,944). Cash lean index for 6/19 is $85.14 up 1.09. DTN projected slaughter for Thursday is expected to be 443,000 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