DTN Before The Bell-Livestock

Firm Gains Trickle Into Livestock Complex

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

Light buyer support is slowly but steadily moving into most livestock contracts Monday morning. The overall lack of direction in the market may add to late-day volatility with traders also looking forward to month-end positioning over the next couple of days. Corn prices are higher in light trade. Stock markets are mixed, Dow Jones is 37 points higher while Nasdaq is down 59 points.

LIVE CATTLE:

Open: 10 to 50 cents higher. Firm buyer support has continued to develop through the nearby contracts during the first few minutes of trade. Although aggressive buying is not expected to quickly develop, the focus on increased trade support through the market may help to rebuild buyer activity during the early part of the week. With month-end just around the corner, there is expected to be some additional weakness through the complex. But so far, moderate gains seem willing to hold early support. This could help to support market fundamentals through the week. Cash cattle markets are expected to remain extremely quiet through the day following the overall lack of trade activity seen last week. The focus on show list distribution and inventory taking will consumer both sides attention through most of the day. The narrow pullback in prices is likely to limit additional direction through the rest of the complex. Open interest Friday slipped 401 positions (312,661). Spot month August contracts lost 2,417 positions (42,420) and October contracts added 1,070 positions (126,906). DTN-projected slaughter for Monday is 118,000 head.

FEEDER CATTLE:

Open: 10 to 30 higher. Narrow gains have trickled into feeder cattle futures early Monday morning. The firm buyer support seen in live cattle trade is the main driver behind the gains seen in feeder contracts so far in the complex. But the overall tone of the market remains weak given the lack of support seen last week and concern that traders may further erode July gains through the end of the month. Cash index for 7/26 is listed at $149.57 up 0.36. Open interest Friday added 74 positions (54,627).

LEAN HOGS:

Open: Mixed. Initial trade early Monday is firming in most contracts with October through April contracts holding 35 to 80 cent gains as traders move into the complex. But narrow losses are scattered through the exchange with traders looking for some follow-through selling pressure to develop in several contracts. August futures are holding 30 cent losses, with limited activity in the spot contract. But the overall lack of price consistency in nearby trade is causing some uncertainty through the entire market. Cash hog trade Monday is $1 to $2 lower per cwt. Bids are scattered through the range. Open interest Friday lost 323 positions (237,740). Spot month August fell 1,243 positions (24,473) and October gained 115 positions (117,544). Cash lean index for 7/26 is $73.46 down 0.97. DTN projected slaughter for Monday is at 435,000 head.

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

(SK)

Rick Kment