DTN Before The Bell-Livestock

Lean Hog Pressure Develops Tuesday

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

Moderate to strong pressure is seen in live cattle and lean hog markets. This may add some additional weakness through the complex as traders have been unable to establish short-term support levels through the week. The increased volume seen early in the week following the holiday weak is adding to the overall market pressure and weaker tone. Corn prices are lower in light trade. Stock markets are higher, Dow Jones is 100 points higher while Nasdaq is up 3 points.


Open: 50 to 90 cents lower. Pressure is seen early in the session as traders continue to focus on limited overall support through the entire complex. Prices are seen at 75 cents per cwt in October futures which is slowly eroding at the narrow premium which has been established in the market over the last couple of weeks. There is growing concern that beef values will become stagnant through the next several weeks now that the Fourth of July holiday is history. But there is still some optimism about building longer term demand which could bring buyers back to the complex through mid-July. Cash cattle interest remains quiet with bids undeveloped and likely will remain that way until midweek. The report of a few asking prices seen in several areas has initial values at $116 and higher live and $185 dressed. Open interest Monday gained 561 positions (321,612). Spot month August contracts lost 6,600 positions (110,609) and October contracts added 3,567 positions (96,848). DTN projected slaughter for Tuesday is 119,000 head.


Open: Mixed. Narrow trading ranges are seen Tuesday with prices 5 cents lower to 10 cents higher. The overall lack of direction while live cattle futures are under firm pressure is giving some traders some additional confidence. Narrow trading ranges are likely to be seen in the first hour of trade, although the pressure in surrounding markets may make it hard to sustain positive price levels through the end of the day. Cash index for 7/6 is listed at $146.48 up 1.33. Open interest Monday fell 479 positions (47,204).


Open: $1 to $2 lower. Firm pressure is seen in nearby lean hog futures which is holding a $1.80 per cwt loss in August futures during initial trade Tuesday. The lack of underlying support in the market has gone beyond just overall concern surrounding the tariff issues, but traders continue to focus on the uncertainty of maintaining or building short and long term pork demand. This is not just an export issue, as any dip in overall economic growth will have a dramatic impact in overall consumer buying activity. This will not only impact the pork markets, but all food products, especially meat and dairy products. Cash hog trade Tuesday is 50 cents to $1.00 lower per cwt. Bids are $1 lower. Open interest Monday fell 1,932 positions (233,623). Spot month July fell 585 positions (10,988) and August slipped 3,965 positions (71,577). Cash lean index for 7/5 is $82.11 down 0.13. DTN projected slaughter for Monday is at 448,000 head. Saturday runs are expected to be seen at 38,000 head.

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


Rick Kment