DTN Before The Bell-Livestock

Mixed Cattle Prices Limit Trade Volume

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

Cattle trade remains sluggish early Wednesday morning with little to no direction yet developing in cash markets in order to give the market any direction. Futures are hovering in narrow ranges, with nearby gains being offset by deferred losses as traders focus on potential short and long term direction shifts. Hog markets have continued the downward market surge early Wednesday, as contracts continue to set new contract lows. Corn prices are lower in light trade. Stock markets are higher, Dow Jones is 10 points higher while Nasdaq is up 29 points.

LIVE CATTLE:

Open: Mixed. Narrow gains of 5 to 15 cents per cwt are seen early Wednesday morning, while deferred contracts are holding losses in the same trading ranges. The overall lack of market direction is keeping overall volume limited through most of the morning as traders try to closely examine the potential direction of outside markets and how this relates to beef market moves over the near future. Additional volume is expected to step back into the complex later in the session, but this may not be enough to solidify additional strong buyer support given the still weak tone seen across the entire complex. Cash cattle interest is expected to improve through the day, although it is likely that active trade will be delayed until sometime Thursday of Friday. Bids and asking prices should start to develop in most areas, even though most of the morning is expected to show any significant interest. Bids are likely to develop near $109 live and $174 dressed, while asking prices are expected well above these levels near $115 and higher live and $182 per cwt dressed. Open interest Tuesday gained 2,418 positions (310,247). Spot month August contracts lost 3,176 positions (36,012) and October contracts gained 2,375 positions (128,099). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Initial trade in feeder cattle futures are mixed to mostly higher. Traders are trying to adjust to the sharp triple-digit losses seen Tuesday as the grain market support seems to be easing Wednesday morning with double-digit losses in the soybean complex. There is likely to be some additional market shifts seen through the midweek trading sessions as traders try to assess longer-term market direction during early August. Cash index for 7/30 is listed at $149.04 down 0.16. Open interest Tuesday fell 466 positions (54,748).

LEAN HOGS:

Open: 40 to 80 cents lower. Follow-through pressure has swept through the lean hog futures complex as traders enter the month of August. There is expected to be some additional market pressure likely to develop through the next couple of days with aggressive pressure seen in cash markets as traders continue to try to adjust to the overall lack of support through the complex. Nearby contracts have posted contract lows once again, but of even more significance is that October futures have slipped below $50 per cwt. This threshold price level, is likely to add even more concerns through the complex over the near future. Cash hog trade Wednesday is $1.50 to $2 lower per cwt. Most bids are $2 per cwt lower. Open interest Tuesday added 893 positions (240,288). Spot month August fell 2,603 positions (20,488) and October gained 534 positions (119,064). Cash lean index for 7/30 is $70.80 down 1.37. DTN projected slaughter for Wednesday is at 460,000 head. Saturday runs are expected at 70,000 head.

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

(SK)

Rick Kment