DTN Before The Bell-Livestock

Firm Gains Sweep Through Hog Trade

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

Early Monday activity remains mixed in a wide trading range. Moderate to firm losses have quickly moved into cattle trade as traders try to adjust to the sharp gains that redeveloped late last week. Hog markets on the other hand are posting moderate to strong follow through support in most contract months early Monday morning. Corn prices are steady in light trade. Stock markets are mixed, Dow Jones is 57 points lower while Nasdaq is up 9 points.

LIVE CATTLE:

Open: 20 to 60 cents lower. Light pressure is slowly developing across the live cattle futures complex with traders looking for the ability to square positions following the late-week rally. This downward market shift early Monday is expected to be more of a corrective measure due to light trade activity and limited interest early in the week, than a significant pullback from the sharp triple-digit rally that developed Friday. Trade volume is expected to remain extremely sluggish through most of the morning, with additional interest likely to be seen through most of the session. Cash cattle activity will start out sluggish following the moderate to active trade that developed late Friday. Live cattle prices were seen $112 to $114 per cwt with most trade at $114 per cwt. This is generally $2 higher than the previous week. Dressed trade in the North was mostly $178 per cwt, generally $2 lower than the last week. Show list distribution and inventory taking will be the order of business through the morning with bids and asking prices likely to be unavailable until later in the week. Open interest Friday gained 2,059 positions (309,377). Spot month August contracts lost 1,556 positions (26,940) and October contracts added 2,484 positions (130,784). DTN projected slaughter for Monday is 118,000 head.

FEEDER CATTLE:

Open: 20 to 50 cents lower. Initial trade Monday morning in the cattle complex is a reaction to the strong market rally which developed late last week. The triple-digit gains in feeder cattle futures have left the door wide open for active position taking with nearby contracts holding moderate losses in the opening minutes of trade. This could add some additional longer term support through the market if buyer interest is reestablished. This all depends on the depth of selling interest mounting early Monday and if the initial losses will spark some traders to move back into the market following the most recent market rally. Cash index for 8/2 is listed at $148.92 down 0.21. Open interest Friday added 352 positions (53,830).

LEAN HOGS:

Open: Mixed. Front month August futures have continued to hold narrow losses following the pullback in price levels seen late last week while the rest of the complex posted triple-digit gains on Friday. Follow through buyer support is slowly but steadily moving into the complex early Monday morning as traders are trying to regain a sense of underlying support following what has been an extremely weak month of July. If traders can develop support levels in nearby contract, the ability to draw light to moderate buyer support into most contracts could help to regain market interest over the next couple of months. Cash hog trade Monday is $1 to $2.00 lower per cwt. Bids remain scattered through the range. Open interest Friday lost 1,809 positions (239,551). Spot month August fell 2,465 positions (14,980) and October added 187 positions (118,765). Cash lean index for 8/2 is $67.57 down 1.34. DTN projected slaughter for Monday is at 397,000 head.

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

(SK)

Rick Kment