DTN Before The Bell-Livestock

Livestock Mixed After Bullish Jobs Report

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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(DTN photo by Nick Scalise)
GENERAL COMMENTS

June cattle are trading up 0.47, by themselves with lower prices in the other months. Both cattle and feeder prices continue to face noncommercial liquidation after a more bullish start to the year.

LIVE CATTLE:

Open: Steady. June cattle are up 0.20 early Friday, getting a little bullish help from the Labor Department's higher-than-expected payroll increase. Friday morning's weather map shows rain around the Texas Panhandle and more pleasant, spring-like temperatures expected throughout the central U.S. Cash cattle are expected to be steady Friday after trading generally $3 to $5 lower this week, around $123 live and $199 dressed. That is also in line with this week's lower boxed beef prices. Cattle and feeder prices are both coming under pressure now that winter weather threats have eased and supplies seem to be flowing more easily. In the case of cattle, a noncommercial position of record high net longs was built over the winter and will likely take time to unravel, keeping prices under pressure. Outside markets are friendly for cattle Friday with the Dow Jones futures trading higher and June crude oil quiet after correcting lower the past week. Dow Jones estimated Friday's cattle slaughter at 120,000 after USDA pegged Thursday's slaughter at 122,000. Total open interest was down 5,937 to 411,293 on Thursday's lower trade. June contracts fell 6,046 to 150,137 and August fell 1,671 to 116,581.

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FEEDER CATTLE:

Open: 2 cents lower. August feeder cattle are down $0.12 early, still under pressure after two weeks of falling prices. Corn is 2 cents lower early Friday. August feeder cattle prices continue to fall sharply, coming off of an adverse weather-inspired high in mid-April, which trapped noncommercials in their net-long positions. Thursday's close was its lowest in three months and the next support to test is at $146 per cwt. The Feeder Cash index for May 1 is listed at $143.90, down $0.34 from a week ago. Total open interest increased 519 to 50,185 on Thursday's new three-month low.

LEAN HOGS:

Open: 40 cents lower. June hogs are down $0.52 early Friday, holding in a new, higher trading range after Thursday's export sales report showed no new purchases from China. Summer futures prices are roughly $10 above cash hog prices and pork cutout values, partly due to seasonal influence and partly due to bullish excitement around the topic of African swine fever in China. Technically speaking, June hogs should have support around $84 to $86. Dow Jones projected Friday's hog slaughter at 464,000 after USDA estimated Thursday's slaughter at 474,000. The Lean Hog Index for May 1 was estimated at $83.23 down $0.50 from a week ago. Cash hog trade is expected to be lower early Friday, while pork carcass values have held steady this week. Total open interest was down 5,858 to 313,443 on Thursday's higher trade. Open interest in the June contract fell 3,950 to 77,612 while August contracts fell 269 to 38,625.

Todd Hultman can be reached at Todd.Hultman@dtn.com

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Todd Hultman