DTN Before The Bell-Livestock

Mixed Trade Develops Across Cattle Complex

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

Mixed cattle trade is limiting overall market direction and trade activity in all markets early Wednesday morning. This could keep markets sluggish through most of the session. Traders continue to focus on the direction in outside markets and look for increased overall trade volume which may be able to solidify buyer interest late in the week. Corn prices are higher in light trade. Stock markets are mixed, Dow Jones is 64 points lower while Nasdaq is up 16 points.

LIVE CATTLE:

Open: Mixed. Light buyer support has been sprinkled through the complex with very limited direction seen midweek. The focus on pressure early in the week is creating some concerns that buyers may have a hard time stepping back into the market and looking for long term support. But overall firm market activity and the expectation that demand for product will remain strong through the end of the year is helping to keep prices supported through the end of July. Cash cattle markets have seen a few bids redeveloping Wednesday morning with prices at $110 per cwt. The overall lack of urgency in the market seems to be focusing on the ability to push trade to the last half of the week. These bids are still well below asking prices of $115 per cwt in most areas. Open interest Tuesday gained 661 positions (314,177). Spot month August contracts lost 2,867 positions (52,477) and October contracts added 2,060 positions (123,081). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Very limited activity is seen early Wednesday in all cattle markets, This is evident in the feeder cattle complex where nearby contracts are holding narrow losses, while narrow to moderate gains are developing in deferred trade. The overall lack of aggressive buyer activity moving into the market is not surprising, but limiting the potential for midweek gains in all contract months. Cash index for 7/23 is listed at $148.27 up 0.22. Open interest Tuesday added 879 positions (53,254).

LEAN HOGS:

Open: 30 to 50 cents higher. Light buyer interest is stepping into the market Wednesday morning, although the lack of consistent support through the end of the day Tuesday is creating some concerns that overall support may not be able to hold and buyer interest remains thin. The overall tone of the complex is starting to firm as traders are trying to establish support levels off of contract lows set last week. This may keep market activity sluggish through most of the morning. Cash hog trade Wednesday is steady to $1.50 lower per cwt. Most bids are steady to $1 lower. Open interest Tuesday added 979 positions (237,716). Spot month August fell 2,629 positions (29,436) and October gained 1,147 positions (115,587). Cash lean index for 7/23 is $76.17 down 0.73. DTN projected slaughter for Wednesday is at 389,000 head. Saturday runs are pegged at 55,000 head.

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

(SK)

Rick Kment