DTN Before The Bell-Livestock

GENERAL COMMENTS

Outside markets are not helping matters for livestock prices Monday with Dow Jones futures trading down 441 points early. Friday's CFTC report also showed noncommercial liquidation taking place in cattle and feeder futures.

LIVE CATTLE:

Open: 70 cents lower. June cattle are down $1.82 early, included in Monday's broad-based selling of stocks and commodities after President Donald Trump threatened China with more tariffs in two tweets on Sunday. China's Vice Premier is expected to lead a trade delegation to Washington D.C. this week and there is now talk that the trip may either get cancelled or be cut short. Cash cattle are not likely to trade Monday after prices dropped $3 to $5 last week, to roughly $123 live and $199 dressed. Given hostile outside events and the likelihood of more noncommercial selling in cattle futures, it is difficult to expect higher cash prices this week. 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, the noncommercial position of record high net longs built over the winter has started to unravel, but at 145,697 contracts, there is still plenty to liquidate. Dow Jones projected Monday's cattle slaughter at 121,000 after USDA estimated Friday's slaughter also at 121,000. Total open interest was down 10,544 to 400,527 on Friday's lower trade. June contracts fell 6,138 to 143,902 and August fell 4,036 to 112,478.

FEEDER CATTLE:

Open: 97 cents lower. August feeder cattle are down $3.12 early, still under pressure after two weeks of falling prices and now being caught in broad-based selling around concerns about trade between the U.S. and China. The one positive for feeders is that corn prices are nearly a dime lower early Monday. August feeder cattle prices continue to trade under bearish pressure, coming off of an adverse weather-inspired high in mid-April, which trapped noncommercials in their net-long positions. Friday's close was its lowest in more than four months and if support fails at $146 per cwt, $135 will be the next challenge. The Feeder Cash index for May 2 is listed at $141.22, down $3.02 from a week ago. Total open interest increased 127 to 50,283 on Friday's new four-month low.

LEAN HOGS:

Open: Down the $3.00 daily limit. June hogs are down $3.00 early Monday, their maximum daily limit, caught in the trade dispute with China that is not going well at the moment. Previous bullish concerns that China would need to buy a lot of U.S. pork to mitigate the damage of African swine fever in China sent June hog prices to challenge $100 per cwt in early April. Monday's new tariff threat from the U.S. throws cold water on that bullish enthusiasm, while it remains to be seen just how much pork China will buy. Summer futures prices are roughly $10 above cash hog prices and pork cutout values, but that wide spread is likely to come under pressure this week. Dow Jones projected Monday's hog slaughter at 471,000 after USDA estimated Friday's slaughter at 460,000. The Lean Hog Index for May 2 was estimated at $83.02 down $0.71 from a week ago. Cash hog trade is expected to be lower early Monday, while pork carcass values held roughly steady last week. Total open interest was up 1,537 to 314,327 on Friday's steady to higher trade. Open interest in the June contract fell 1,433 to 76,126 while August contracts were up 299 to 38,805.

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

(BAS)

Copyright 2019 DTN/The Progressive Farmer. All rights reserved.