DTN Before The Bell-Livestock

Strong Gains Redevelop in Hog Futures

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

Cattle futures have eroded early Tuesday with pressure seen following the release of the cold storage report. Traders are also focusing on the overall lack of additional market support as buyer support seems to be slowing significantly through the end of July. Hog markets have posted firm market gains with overall support developing in nearby contracts. Corn prices are lower in light trade. Stock markets are higher, Dow Jones is 128 points higher while Nasdaq is up 66 points.

LIVE CATTLE:

Open: 30 to 70 cents lower. Light to moderate pressure is seen in live cattle futures as traders focus on limited market activity Tuesday. The cold storage report posted overall beef stocks in freezers fell 3% from May levels, but is 8% above year-ago levels. Although current demand and export numbers continue to focus on the ability to move beef through the early summer months, the amount of beef available to the market compared to 2017 is causing some market pressure as traders re-enter the market Tuesday. It is uncertain just how much long-term impact this will have on market prices, as the fact that beef has been readily available given overall processing schedules is not new news. Cash cattle activity is undeveloped with bids and asking prices still hard to pin down at this point. It is expected that asking prices may trickle into the market through the day, although bids may be hard to find until the second half of the week. The support in cash trade last week will help to solidify buyer interest through the week as feeders watch outside market direction. Open interest Monday gained 402 positions (314,468). Spot month August contracts lost 3,292 positions (55,664) and October contracts added 952 positions (121,144). DTN projected slaughter for Tuesday is 120,000 head.

FEEDER CATTLE:

Open: 10 to 40 lower. Narrow losses have trickled into the complex early Tuesday morning with increased focus being placed on the longer term direction in the market. Although there is expected to be some additional market support seen from outside market moves, the fact that traders are looking for additional support following the unsteady market shifts Monday may add some overall market weakness to the complex. Cash index for 7/20 is listed at $148.49 up 0.47. Open interest Monday added 840 positions (52,376).

LEAN HOGS:

Open: 20 to 50 cents higher. Limited trade volume is seen through the complex, although the overall tone of the market remains firm following the triple-digit gains seen in several contracts Monday. If current buyer interest can hold through the next couple of days, the potential of establishing support levels near $66.50 per cwt in spot August futures could help to draw some additional interest back into the market. October and December contracts continue to be the market to follow as strong triple-digit support developed Monday and is brining active trade back to the complex early Tuesday. Cash hog trade Monday is $0.50 to $2.00 lower per cwt. Most bids $1 lower. Open interest Monday added 4,969 positions (236,774). Spot month August fell 1,175 positions (32,072) and October gained 1,865 positions (114,460). Cash lean index for 7/20 is $76.90 down 0.93. DTN projected slaughter for Tuesday is at 455,000 head.

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

(SK)

Rick Kment