DTN Before The Bell-Livestock

Cattle Trade Mixed in Limited Activity

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

Livestock futures are mixed in a narrow trading range. This is keeping most nearby contracts within a single-digit trading range through the first few minutes of trade. The aggressive price swings seen in all markets through the last week is still bringing some market adjusting to the table. Corn prices are lower in light trade. Stock markets are higher, Dow Jones is 90 points higher while Nasdaq is up 46 points.

LIVE CATTLE:

Open: Mixed. Nearby live cattle futures have posted narrow gains of 20 to 30 cents per cwt, while deferred futures are trading steady to 10 cents lower. The overall lack of direction through the morning comes following limited market movement early in the week. This could add some additional uncertainty to the direction of the complex, although long term support is still expected in beef demand. This should help to limit overall pressure during the end of August. Cash cattle interest is sluggish with bids and asking prices still undeveloped. It is likely to be the second half of the week before trade develops, and may be midweek or later before active bids are seen. Open interest Monday fell 802 positions (299,814). Spot month August contracts lost 832 positions (7,624) and October contracts lost 1,269 positions (129,053). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Mixed trade is seen through the feeder cattle complex with nearby futures contained to single digit price swings through the opening minutes of trade. The overall lack of direction in the complex Tuesday is still focusing on concerns which developed around the losses seen Monday. The strong market rally last week has put the feeder cattle futures in the middle of the sideways trend seen through the last month, but this may bring additional volatility through the rest of the summer as prices have a wide gap before meeting any support or resistance. Light trade is expected through most of the session, although outside market direction will play a bigger role in the overall market activity. Cash index for 8/17 is listed at $149.66, up 0.07. Open interest Monday added 72 positions (48,889).

LEAN HOGS:

Open: Steady to 20 cents higher. Narrow gains have slowly but steadily moved back into the lean hog complex. The pullback in the complex on Monday had more to do with trader positioning rather than any significant move in either technical of fundamental factors. The weaker tone seen in the cash markets through the last week despite the rally in futures trade, may have a hard time gaining momentum given the amount of hogs available to the market. Light trade is expected to be seen through the morning, which may spark some additional market shifts later in the day. Cash hog trade Tuesday is expected steady to $2 lower per cwt. Most bids will be steady. Open interest Monday lost 4,910 positions (222,367). Spot month October fell 4,720 positions (110,343) and December liquidated 730 positions (57,046). Cash lean index for 8/17 is $51.51 down 1.43. DTN projected slaughter for Tuesday is at 455,000 head. Saturday runs are expected at 207,000 head.

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

(SK)

Rick Kment