DTN Before The Bell-Livestock

Cattle Futures Hold Light Pressure

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

Light to moderate pressure is seen through cattle trade during sluggish volume Monday morning. Very limited price shifts are expected to be seen in most livestock futures during the morning, leading to additional overall movement through the complex. Corn prices are lower in light trade. Stock markets are mixed, Dow Jones is 93 points higher while Nasdaq is up 11 points.

LIVE CATTLE:

Open: Steady to 60 cents lower. Limited market activity is seen in the opening minutes of trade Monday morning. The focus on trade activity is starting to take into account the lack of support in cash cattle markets last week as well as the general pressure which has developed in all cattle trade. Most contracts are trading within a narrow trading range of 27 to 30 cents per cwt although August futures are leading the market lower with 60 cent losses. This pressure is not expected to spark any long term market shifts as the complex continues to hold the sideways trading pattern seen through the last several weeks. Cash cattle activity is expected to be limited to inventory taking and show list distribution through the day. The fact that trade happened late last week may continue to push active cash movement toward the end of the week once again. Open interest Friday gained 1,951 positions (301,194). Spot month August contracts lost 1,124 positions (8,456) and October contracts added 572 positions (130,371). DTN projected slaughter for Monday is 119,000 head.

FEEDER CATTLE:

Open: 10 to 50 cents lower. Light pressure is slowly trickling into the feeder cattle complex early Monday morning. The firm gains seen at the end of last week has helped to draw additional underlying support back into the complex. The initial moves lower have caused traders to back away from the triple digit gains seen in most contracts Friday, but the limited activity and narrow trading ranges seem to limit any longer term market direction early in the week. Currently nearby feeder cattle futures are starting to become established in a sideways trading range which has developed over the last couple of weeks. Cash index for 8/16 is listed at $149.59, down 0.70. Open interest Friday fell 402 positions (48,817).

LEAN HOGS:

Open: 30 to 60 cents Higher. Light buyer support has trickled into the lean hog complex in the opening minutes of trade following the aggressive triple digit gains seen Friday. The focus on upcoming talks with the Chinese delegation later this week is expected to help spark some underlying market moves in the entire hog complex. But the potential of traders trying to take profits following the market surge over the last week could lead to a sell-off later in the morning. Front-month October futures have gone on an unchecked and unchallenged $8 per cwt market rally over the last few days. This may still point to firm buyer support stepping into the market, but a rally this fast, and this aggressive, usually brings about a market correction. Cash hog trade Monday is expected 50 cents to $2 lower per cwt. Most bids will be 50 cents to $1 per cwt lower. Open interest Friday lost 6,041 positions (227,308). Spot month October fell 874 positions (115,063) and December liquidated 2,548 positions (57,792). Cash lean index for 8/16 is $52.94 down 1.27. DTN projected slaughter for Monday is at 455,000 head.

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

(SK)

Rick Kment