DTN Before The Bell-Livestock

Hog Futures Surge Higher

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

Sharp gains have quickly moved into the hog complex surrounding widespread commodity market support early Thursday on the news of trade talks developing between US and China. This has started the roller coaster ride once again, although at this point, the volatility is likely to be far from over. Cattle markets are mixed in light trade, as traders are looking for more direction through the session. Corn prices are higher in light trade. Stock markets are higher, Dow Jones is 249 points higher while Nasdaq is up 51 points.

LIVE CATTLE:

Open: Mixed. Light to moderate buyer support is slowly moving into nearby live cattle trade. The news surrounding rekindling trade talks between US and China has helped to kindle overall buyer support in most markets. There remains some light price pressure in deferred contracts during the initial minutes of trade, but the buyer interest in nearby contracts is helping to set the tone for a positive price shift through the day. Cash cattle activity is expected to remain silent early Wednesday following just a handful of trade seen in parts of the North. These sales developed at $109.50 per cwt, but is not enough to establish a trend. Asking prices and bids are generally undeveloped in most areas early Wednesday, but interest is likely to increase through the day. Open interest Tuesday gained 1,341 positions (300,946). Spot-month August contracts lost 607 positions (11,277) and October contracts added 488 positions (131,332). DTN projected slaughter for Wednesday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Early buyer support swept through the feeder cattle complex following underlying support in the hog complex and most other commodity markets early in the session. But buyer interest has been hard to maintain in the first few minutes, as weakness seems to be building through deferred contracts and is moving through the entire complex. This could keep prices unsettled not only through the Thursday session, but at the end of the week. There is growing uncertainty as to just how much additional direction may develop during the rest of the morning as traders are not only focusing on the moves in beef trade, but also production costs associated with the rally in grain markets. Cash index for 8/14 is listed at $150.34, down 0.30. Open interest Tuesday lost 771 positions (49,732).

LEAN HOGS:

Open: $1 to $2.50 higher. Sharp gains have flooded back into the lean hog complex early Thursday morning. The news that trade talks between the US and China are back on the drawing board concerning tariff issues and trade concerns has sparked widespread buyer support in most commodities. Nearby lean hog futures have rallied over $2 per cwt higher in the opening minutes of trade with more active support moving into the market by the minute. This market rally has further distanced prices from recent long-term lows set last week with prices surging $6 per cwt in recent days. This momentum may continue to spark some underlying support in all market trade, although lean hog futures continue to be the driver of the meat complex early Thursday morning. Cash hog trade Thursday is 50 cents to $2 lower per cwt. Most bids are $1.00 per cwt lower. Open interest Wednesday gained 2,290 positions (235,774). Spot month October added 534 positions (116,732) and December gained 1,116 positions (60,307). Cash lean index for 8/14 is $55.23 down 1.58. DTN projected slaughter for Thursday is at 465,000 head. Saturday runs are expected at 153,000 head.

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

(SK)

Rick Kment