DTN Before The Bell-Livestock

Firm Cattle Buying Stepping into Complex Thursday

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

Mixed trade is seen early Thursday morning as overall trade volume remains extremely sluggish coming out of the holiday break. This is expected to keep overall trade activity limited with buyers focusing on the ability to draw support back into the complex through the rest of the month. Corn prices are higher in light trade. Stock markets are higher, Dow Jones is 116 points higher while Nasdaq is up 38 points.

LIVE CATTLE:

Open: 20 to 80 cents higher. Limited activity is expected over the next couple of trading sessions. This may add some uncertainty to the complex although initial market shifts are higher in light activity. There is growing support that the limited trade could open the door for moderate gains through the Thursday session. This could carry into the end of the week and potentially affect cash cattle and beef values. Cash cattle interest still remains extremely sluggish. Even though bids are expected to start to develop through the day Thursday, it is likely that a wide gap will be seen between asking prices and bids through the first half of the day at least. Given the holiday break in the middle of the week, it would not surprise anyone if trade is delayed until sometime Friday. Open interest Tuesday fell 1,527 positions (323,617). Spot month August contracts lost 4,371 positions (127,423) and October contracts added 1,806 positions (89,603). DTN projected slaughter for Thursday is 118,000 head.

FEEDER CATTLE:

Open: 10 to 50 cents higher. Light to moderate support is moving into the cattle complex, with buyer activity generally consistent in feeder cattle trade. Prices are 25 to 40 cents higher in most nearby contracts as trades look for limited activity through most of the session. Ovrall trade volume through the end of the week is expected to remain subdued as traders try to assess longer term market direction through the entire complex and more traders will return next week from the holiday break. Cash index for 7/2 is listed at $143.42 up 0.75. Open interest Tuesday slipped 255 positions (46,838).

LEAN HOGS:

Open: Mixed. Initial trade early Thursday morning is just as sluggish as activity before the midweek holiday break. Traders are slowly entering the market with mixed price levels as markets are hovering between 65 cents lower to 60 cents higher in the opening minute of trade. The concern that follow through buying may quickly run out of gas through the end of the week and expected limited trade volume also in the complex is adding weakness to several contract months. Many traders are already looking into next week as they focus on the overall lack of interest through the holiday week. Cash hog trade Thursday is steady to $1 lower per cwt. Most bids are steady. Open interest Tuesday fell 1,280 positions (232,083). Spot month July fell 1,467 positions (14,678) and August slipped 2,030 positions (73,088). Cash lean index for 7/2 is $82.51 down 0.46. DTN projected slaughter for Thursday is at 457,000 head. Saturday runs are expected at 150,000 head.

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

(SK)

Rick Kment