DTN Before The Bell-Livestock

Firm Gains Sweep Through Cattle Futures

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

Livestock futures are mixed in moderate trading ranges early Wednesday morning. The overall focus on beef market fundamentals is helping to spark some additional market interest through the entire complex. Live cattle futures are leading the market higher, although narrow to moderate pressure is redeveloping in the already weak lean hog trade. Corn prices are higher in light trade. Stock markets are mixed, Dow Jones is 35 points higher while Nasdaq is down 9 points.

LIVE CATTLE:

Open: Steady to 70 cents higher. Live cattle futures are regaining market support with nearby contracts surging 40 to 70 cents per cwt higher in the initial minutes of trade. These gains are may help to spark some additional longer term support through the complex with increased overall market interest likely to be seen in all futures contracts. August contracts continue to be the market to watch early in the session as commercial buyer support continues to be developing across the market. Cash cattle activity remains undeveloped Wednesday morning. There are a few asking prices starting to be floated around, with asking prices at $114 and higher live and $180 to $183 dressed. Even though the Fed Cattle Exchange will trade Wednesday morning, market definition is not expected to be seen until later in the week. It may easily be after the release of the cattle on feed report Friday before active trade develops. Open interest Tuesday gained 779 positions (321,383). Spot month August contracts lost 3,421 positions (70,324) and October contracts added 2,046 positions (120,139). DTN projected slaughter for Wednesday is 120,000 head.

FEEDER CATTLE:

Open: 20 to 50 cents higher. Buyer support is slowly but steadily stepping back into the complex. This may help to draw additional buyer support to the entire cattle market following the strong triple-digit pullback in late-day trade Tuesday. August futures are holding gains of 50 cents per cwt, which is leading the entire feeder cattle market higher. It is still undetermined just how much buyer support remains in the market, and if this support will be able to hold through the end of the session. Cash index for 7/16 is listed at $148.37 up 0.10. Open interest Tuesday added 550 positions (47,964).

LEAN HOGS:

Open: 10 to 50 cents lower. Strong pressure continues to develop through the lean hog complex as traders are focusing on sharp losses which redeveloped over the last couple of trading sessions. This is likely to limit buyer activity from moving back into the market over the near future. Although trade volume remains sluggish, the weakness in the market is likely to extend to cash hog and pork values through the rest of the week. Cash hog trade Wednesday is steady to $2.00 lower per cwt. Most bids are 50 cents to $1 lower. Open interest Tuesday gained 1,866 positions (233,263). Spot month August fell 3,066 positions (40,593) and October gained 3,823 positions (40,593). Cash lean index for 7/16 is $79.69 down 0.65. DTN projected slaughter for Wednesday is at 459,000 head. Saturday runs are expected to hit 123,000 head.

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

(SK)

Rick Kment