DTN Before The Bell-Livestock

Firm Gains Redevelop Friday

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

Strong early gains have quickly developed through the lean hog complex. This may help to spark some additional longer term buyer activity to not only shift into hog trade, but the entire livestock complex. Corn prices are higher in light trade. Stock markets are lower, Dow Jones is 2 points lower while Nasdaq is down 22 points.

LIVE CATTLE:

Open: Steady to 50 cents higher. Firm market support is slowly but steadily moving back into the live cattle complex. Traders are looking for underlying support in the boxed beef complex in order to help draw trade activity back into the complex and bring some stability to the market through the end of August. Even though sharp gains have quickly developed in lean hog futures, the live cattle complex has been less aggressive with traders looking at continued firm support through the end of the year. The volatility has been less aggressive in cattle trade than other commodity markets, which has allowed traders to focus more on short- and long-term fundamental market direction, and less focus on outside market shifts. This could keep cattle markets trading in a narrow to moderate range through the end of the week. Cash cattle markets are quiet early Friday morning with bids undeveloped at this point of the morning. Packer interest is expected to improve significantly over the next couple of hours. Asking prices still remain firm with price set at $112 and higher live and $178 and above dressed basis. Open interest Thursday gained 1,256 positions (299,818). Spot month August contracts lost 718 positions (9,685) and October contracts fell 373 positions (129,863). DTN projected slaughter for Friday is 117,000 head.

FEEDER CATTLE:

Open: 10 to 70 cents higher. Light to moderate support is expected to develop across the entire cattle complex with feeder cattle futures holding the most significant support with nearby contracts holding a 70 cent rally in the opening minutes of trade. The strong outside market support seen through the end of the week is helping to solidify additional buyer support from the commercial side of the market. But there is also some uncertainty as to just how much additional trade may develop through the end of the week. The moves through the morning have helped to push feeder cattle futures above $150 per cwt, which is moving prices $2 per cwt above recent market lows. The potential to end the week at these price levels will help to solidify longer-term buying through the rest of the complex. Cash index for 8/14 is listed at $150.34, down 0.30. Open interest Thursday added 32 positions (49,223).

LEAN HOGS:

Open: $1 to $2 higher. Strong follow-through gains have quickly swept through lean hog trade with increased overall support moving across the complex. This may add some additional underlying support through the entire complex. Limit gains Thursday has allowed for expanded trading limits through the Friday session, but currently there is little interest in showing significant market support early in the session. Cash hog trade Friday is expected steady to $1 lower per cwt. Bids will be scattered through the range. Open interest Thursday lost 1,962 positions (233,798). Spot month October fell 779 positions (115,939) and December added 33 positions (60,340). Cash lean index for 8/15 is $54.21 down 1.02. DTN projected slaughter for Friday is at 444,000 head. Saturday runs are expected at 157,000 head.

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

(SK)

Rick Kment