DTN Before The Bell-Livestock

Continued Pressure Sweeps Through Livestock Trade

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

Livestock markets remain under light to moderate pressure with very limited activity through the rest of the week. Lean hog futures continue to lead the market lower with a 90 cent per cwt loss developing across the complex and this could add even more weakness to the entire complex through the end of the month. Corn prices are lower in light trade. Stock markets are mixed, Dow Jones is 157 points higher while Nasdaq is down 9 points.

LIVE CATTLE:

Open: 30 to 70 cents lower. Strong pressure has moved back into the front month June live cattle futures with prices falling 65 cents per cwt in the opening minutes of trade. The rest of the complex is much more subdued with limited activity through the morning. The expectation is that light pressure may continue through most of the morning with traders looking for additional direction from cattle on feed numbers and the ability to get cash trade accomplished. There is likely to be some limited market shifts through the day as traders also try to square positions at the end of the week. Cash cattle trade seems a long way off at this point with bids and asking prices spanning a wide gap. Bids are being renewed at $108 live basis and $172 to $173 dressed. Asking prices remain firm at $115 live basis and $180 and higher dressed. Given the light trade last week, it is expected that packers will need to source increased numbers of cattle through the week. And this may be delayed until after the cattle on feed report Friday afternoon. Open interest Thursday gained 2,225 positions (325,515). Spot month June contracts lost 967 positions (4,789) and August contracts added 5 positions (146,658). DTN projected slaughter for Friday is 116,000 head.

FEEDER CATTLE:

Open: 40 to 50 cents lower. Follow through losses have continued to develop through the feeder cattle complex with traders focusing on increased pressure through the entire livestock market Friday. Losses have been extremely consistent through the first few minutes of trade with traders looking for increased overall movement across the complex as weakness in live cattle trade and uncertainty surrounding the cash cattle market continues to keep many traders uneasy. Traders are also trying to adjust to the upcoming cattle on feed report which will be released after markets close Friday. Cash index for 6/20 is listed at $142.21 up 0.80. Open interest gained 237 positions (45,458).

LEAN HOGS:

Open: Steady to 75 cents lower. Light to moderate pressure is slowly trickling into the lean hog futures complex Friday with deferred contracts leading the market lower as concerns of further cash and pork market weakness develops through the last half of June. Trade is expected to remain sluggish through most of the morning as traders seem content with the current market levels after pulling back from recent gains seen over the last couple of weeks. Cash hog trade Friday is steady to $1 lower per cwt. Most bids are $1 lower. Open interest Thursday added 605 positions (226,366). Spot month July fell 1,907 positions (25,311) and August gained 1,025 positions (77,958). Cash lean index for 6/20 is $85.79 up 0.65. DTN projected slaughter for Friday is at 430,000 head. Saturday runs are expected at 2,500 with no major packers are slated to run.

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

(SK)

Rick Kment