DTN Before The Bell-Livestock

Sluggish Buyer Support Trickling Through Complex

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

Mixed trade develops in livestock trade as very little additional direction is developing through the entire complex. The potential for deferred buyer support in lean hog to move through the rest of the hog complex could help to bring some much needed stability to the complex at the end of the week. Corn prices are higher in light trade. Stock markets are mixed, Dow Jones is 28 points higher while Nasdaq is down 5 points.

LIVE CATTLE:

Open: Mixed. Early moves in live cattle futures have been unable to break out of a narrowly mixed trading range. August futures are holding 20 cent gains, which is leading nearby contracts higher based on limited buyer support moving back into the market and traders focusing on the ability to bring some additional interest into the complex. Deferred futures are steady to 30 cents lower following the lack of support in feeder cattle trade and concern that demand through the end of the year may not spark longer term buyer interest over the near future. Cash cattle interest still remains sluggish heading into the home stretch. Packer interest is expected to improve through the day, although bids are redeveloping at $108 to $110 per cwt live basis. It is expected that packers will need to gain access to additional numbers, although the certainty of active trade is still questionable. It may easily be late afternoon before deals are struck. Asking prices remain at $114 and higher live and $182 to $183 per cwt dressed. Open interest Thursday slipped 201 positions (308,983). Spot month August contracts lost 2,170 positions (28,763) and October contracts added 794 positions (128,455). DTN projected slaughter for Friday is 118,000 head.

FEEDER CATTLE:

Open: 10 to 50 cents lower. Follow through pressure has quickly moved into the feeder cattle complex early Friday morning. The overall lack of support in the cattle complex through early August seems to be the main focus of traders concerns as overall weakness may continue to erode market support over the near future. Nearby contracts are holding minimal losses, with prices 10 to 20 cents per cwt lower. The limited volume and trade activity in deferred contracts is adding to the overall market pressure with losses in early 2019 contracts reaching 40 to 50 cents per cwt. Firm grain market support continues to be the main driver of selling pressure in the feeder cattle complex over the last couple of days. Cash index for 8/1 is listed at $149.13 down 0.26. Open interest Thursday fell 141 positions (53,524).

LEAN HOGS:

Open: Mixed. Limited activity is trickling into the lean hog complex with August through December contracts posting follow through pressure based on the continued aggressive pressure seen in the complex. This pushed August contracts 77 cents lower in opening trade, while other nearby contracts are trading 5 to 15 cents lower. The ability to bring some limited buyer activity into 2019 contracts with February through August contracts holding firm gains of 60 to 90 cents per cwt. The potential that long-term supply levels may be starting to ease, and bringing commercial buyers back into the complex. Cash hog trade Thursday is $1 to $2.00 lower per cwt. Most bids are $2 per cwt lower. Open interest Thursday lost 538 positions (241,275). Spot month August fell 1,757 positions (17,355) and October slipped 787 positions (118,578). Cash lean index for 8/1 is $68.91 down 1.07. DTN projected slaughter for Thursday is at 450,000 head. Saturday runs are expected at 80,000 head.

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

(SK)

Rick Kment