DTN Before The Bell-Livestock

Limited Activity Develops Early Friday

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

Mixed trade is seen through the livestock complex. There is growing uncertainty as to just how much additional trade volume will develop the rest of the week and if most traders will wait it out and step back to the table early next week. Corn prices are higher in light trade. Stock markets are mixed, Dow Jones is 5 points lower while Nasdaq is up 30 points.


Open: Mixed. Light pressure is seen in deferred contracts as nervousness is seen through the complex as traders don't quite know what to expect on "tariff day." Friday is when this round of imposed tariffs are to take effect, which may lead to some market uncertainty. Livestock traders are most closely focusing on the grain complex and what impact this will have on soybeans, soybean meal and other markets. But there is also the concern that this may not be the end of the line when focusing on the trade war that may not have a quick ending. Nearby contracts have posted narrow gains, based on follow through buyer support seen Thursday. This could limit additional market movement through the rest of the session and well into next week. Cash cattle activity is going into the Friday morning with just a handful of token cattle sold in the South at $110. It is not expected that feeders are going to settle at this level without a significant breakdown in futures trade through the morning. Asking prices are seen at $113 and higher in the South and $176 and higher. But this will likely not keep bids from opening at $110 live and near $170 dressed. But it is expected that at least moderate trade is needed to be seen by the end of the week in order to fuel the full week of production next week. Open interest Thursday gained 647 positions (323,719). Spot month August contracts lost 3,789 positions (123,561) and October contracts added 2,385 positions (91,894). DTN projected slaughter for Thursday is 118,000 head.


Open: 10 to 40 cents lower. Limited trade activity is likely to keep the overall market sluggish. Initial selling pressure is based on position squaring activity following Thursday's gains. This could add some mixed trade through the morning, although traders seem to be focused more on outside market and political issues that could affegh the livestock trade. The movement in the grain and feed markets continues to be the biggest focus in the feeder cattle trade, which will impact overall production costs through the end of the year. Cash index for 7/3 is listed at $144.73 up 0.96. Open interest Thursday added 378 positions (47,215).


Open: 10 to 50 cents lower. Light to moderate pressure is seen early Friday morning as follow-through selling is developing in the first few minutes of trade. Overall volume remains sluggish and is likely to stay that way through the end of the day as many traders seem to have already set their positions for the week due to the limited holiday trading schedule early in the week. This could spark some increased movement early next week. But traders are also concerned about just what impact the current tariffs that are scheduled to be implemented Friday will have on the short and long term direction of the market. Cash hog trade Friday is steady to $1.00 lower per cwt. Most bids are steady. Open interest Thursday added 1,789 positions (233,856). Spot month July fell 1,728 positions (12,950) and August slipped 1,509 positions (71,577). Cash lean index for 7/2 is $82.51 down 0.46. DTN projected slaughter for Friday is at 447,000 head. Saturday runs are expected at 150,000 head.

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


Rick Kment