DTN Before The Bell-Livestock

Light Pressure Slips Into Cattle Futures

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

Narrowly mixed trading ranges have developed through the complex with cattle markets mixed to mostly lower, while lean hog futures are mixed to mostly higher in the early minutes of trade. It is likely that trade volume will remain subdued through the Tuesday session with traders focusing on end-of-month position taking through the rest of the session. Corn prices are higher in light trade. Stock markets are higher, Dow Jones is 79 points higher while Nasdaq is up 19 points.

LIVE CATTLE:

Open: Mixed. Extremely limited trade activity has developed early Tuesday morning with prices hovering from 15 cents lower to 10 cents higher in the opening minutes of trade. There seems to be very limited interest in aggressively moving prices in either direction. This could quickly allow markets to coast into the end of the month as most of the needed position taking seems to be already in the books. But given the moderate pressure in the complex over the last week, if trade activity does develop before the end of the session, it is likely that prices will continue to see moderate pressure. The focus on current seasonal demand and the expected ability to move additional beef product is helping to maintain prices near the top end of the range. This could limit additional uncertainty through early August, as cattle supplies remain strong over the near and intermediate future. Cash cattle activity appears to remain quiet through most of the morning with bids and asking prices still hard to pin down through the morning. Although a few cattle were sold in Nebraska at $177 per cwt Monday, these moves are likely to fill open spots in processing lines due to the light trade last week. Packers remain short bought, but are unlikely to become too aggressive this early in the week. Active trade is likely to be delayed until the second half of the week once again. Open interest Monday slipped 3,593 positions (308,447). Spot month August contracts lost 2,698 positions (39,419) and October contracts fell 986 positions (125,822). DTN projected slaughter for Tuesday is 118,000 head.

FEEDER CATTLE:

Open: 10 to 20 lower. Limited movement is seen thorugh the entire feeder cattle complex with a very narrow trading range developing in the opening minutes of trade. Although the tone of the market remains weak following recent market pressure, traders seem unconvinced to actively move back into the complex and push prices significantly lower at this point. It is likely there will be some additional market shifts through the day, although trade may remain sluggish through the entire session. Cash index for 7/27 is listed at $149.20 down 0.37. Open interest Monday added 544 positions (55,226).

LEAN HOGS:

Open: Mixed. Early trade in the hog complex continues to focus on very limited long-term market direction as prices continue to chop around near the bottom of the trading range. Nearby contracts are either at or near contract lows as pressure in market fundamentals as well as lack of overall support in the technical factors is likely to help spark any support through the complex. This could add even more weakness to the complex through the end of the July as traders try to adjust positions before moving into August. Cash hog trade Monday is $1 to $2 lower per cwt. Bids are scattered through the range. Open interest Monday added 1,564 positions (239,380). Spot month August fell 1,477 positions (23,071) and October gained 986 positions (118,530). Cash lean index for 7/27 is $72.17 down 1.29. DTN projected slaughter for Tuesday is at 445,000 head. Saturday runs are expected at 70,000 head.

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

(SK)

Rick Kment