DTN Before The Bell-Livestock

Limited Volume Keeps Prices Mixed

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

Livestock futures remain mixed in a narrow trading range following early week losses. A combination of short covering is seen in nearby cattle trade, while traders through the lean hog complex seem concerned that the late week pressure seen Monday may spark some additional widespread liquidation. Corn prices are lower in light trade. Stock markets are higher -- Dow Jones is 95 points higher, while Nasdaq is up 33 points.


Open: Mixed. Following light pressure Monday, prices are mixed within a narrow trading range. Most contracts are trading from 10 cents lower to 10 cents higher based on limited trade activity and an overall lack of direction in the complex. There is growing uncertainty through the entire market, although the underlying tone of the market remains firm based on the expectation that beef demand will continue to firm through the end of the year. This may help drive additional interest back into the complex with traders looking for longer-term direction. Cash cattle interest remains unestablished with bids and asking prices not yet fully developed. This is likely to keep the cash side of the market quiet until later in the week and potentially limit active bids from developing until midweek. The focus on beef values is likely to add some direction to the market over the next few days. Open interest Monday slipped 1,142 positions (301,971). Spot month August contracts lost 3,077 positions (17,966) and October contracts slipped 160 positions (130,561). DTN projected slaughter for Tuesday is 119,000 head.


Open: 20 to 30 cents lower. Follow through pressure is slowly developing Tuesday morning with contracts trading within a narrow, but weaker, trading range. This overall lack of direction is likely to add some uncertainty to the complex with August and September futures each holding losses of 25 cents per cwt during the first few minutes of trade. Cash index for 8/3 is listed at $149.74 down 0.82. Open interest Monday added 20 positions (53,850).


Open: Mixed. Initial trade is expected to remain sluggish through the entire morning with narrow gains trickling into the nearby contracts. Deferred futures remain under light pressure, but the overall tone of the market appears to be firming based on short covering following Monday's losses. Even though buyer interest is developing, the concern that these early gains may not hold once increased volume is seen is creating additional movement through the complex. Cash hog trade Tuesday is $1 to $2.00 lower per cwt. Bids remain scattered through the range. Open interest Monday added 1,162 positions (240,843). Spot month August fell 2,341 positions (12,774) and October added 1,278 positions (120,043). Cash lean index for 8/3 is $66.04 down 1.54. DTN projected slaughter for Tuesday is at 463,000 head. Saturday runs are expected at 124,000 head.

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


Rick Kment