DTN Before The Bell-Livestock

GENERAL COMMENTS

Strong pressure is developing in the lean hog complex with traders focusing on overall bearish market structure as there were minimal sales to China in the Export Sales report. Cattle markets are mixed, but still holding a weaker tone through the last half of the week. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 320 points lower with Nasdaq down 123 points.

LIVE CATTLE:

Open: Mixed. Light buyer support has moved back into summer live cattle trade with buyers slowly trying to create some needed stability in the complex. The sharp losses in beef values have added concern that follow-through pressure may develop in deferred contract months. There is growing volatility in outside markets that is impacting overall movement in cattle trade. Cash cattle activity is likely to be wrapped up for the week in most areas following trade each of the last three days, which allowed for markets to erode lower in a wide range. Southern trade developed at $120 per cwt, mostly $2 to $3 per cwt lower, while trade in the North is at $190 to $195, which is $2 to $8 per cwt lower than last week. The lower range of trade is set for delayed delivery, even as far out as the first week of June. Open interest Wednesday liquidated 2,456 positions (380,887). Spot-month June contracts lost 8,789 positions (117,691) and August contracts added 3,987 positions (116,919). DTN projected slaughter for Thursday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Trade is light in the entire cattle complex with increased focus on the ability to stem additional pressure in the complex. There is growing uncertainty as traders still see little incentive to move back into the complex. The cash index for 5/7 was $136.57 down $0.10. Open interest Wednesday fell 211 positions (48,351).

LEAN HOGS:

Open: $1 to $2.50 Lower. Sharp follow-through pressure has quickly and aggressively moved through the lean hog futures complex Thursday morning following only minimal export sales to China in the last week. There is growing uncertainty about the ability to secure a trade deal with China. This may add increased volatility the rest of the week. The potential for limit lower trade with little buyer interest being able to move back into the complex has continued to add increased uncertainty in the entire market. Cash hog trade is called steady to $1 lower with bids scattered through the range. Open interest liquidated 4,861 positions (303,598). June slipped 6,066 positions (59,821) and July gained 1,859 positions (53,499). Cash lean index for 5/7 is $82.68 up $0.05. DTN projected slaughter for Thursday is 474,000 head. Saturday runs are expected near 12,000 head.

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

(BAS)

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