DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed trade developed following firm follow-through support in lean hog trade while hog futures have continued to slowly erode from last week's gains. The pullback in feeder cattle trade is most obvious as traders refocus on strong grain market gains Monday morning. Corn markets are higher in light early trade. Stock markets are lower. Dow Jones is 96 points lower with Nasdaq down 117 points.

LIVE CATTLE:

Open: Steady to 50 cents lower. Limited activity is seen early Monday morning with light to moderate pressure seen in all nearby contracts. The softness seen in feeder cattle trade has slowly pulled emphasis away from gains which developed late last week. The announcement last week that beef products now have full access to Japan export trade has helped to add underlying support to the complex. But with August futures still hovering below $109 per cwt Monday morning, it is likely that narrow trading ranges will continue through most of the session. The focus on outside market direction will be countered by the ability to spark renewed wholesale beef support early in the week. Cash cattle interest is expected to revert back to limited direction with show list distribution and inventory taking the main priority of the day. Open interest Friday added 754 positions (381,585). Spot month June contracts lost 5,384 positions (73,126) and August contracts added 2,949 positions (145,901). DTN projected slaughter for Monday is 121,000 head.

FEEDER CATTLE:

Open: $1 to $1.50 lower. Firm pressure early Monday is steadily backing away from gains late last week. Although the underlying tone of the market remains firm as renewed buyer activity moves into the complex the focus on rising feed prices and lack of active wholesale beef support is curbing previous optimism. August futures are posting $1.30 per cwt losses in early trade with increased softness developing through the entire complex Monday morning. Cash index for 5/16 is $132.76 up $0.33. Open interest Friday fell 712 positions (50,391).

LEAN HOGS:

Open: Steady to $1 higher. Firm follow-through buyer interest is redeveloping Monday morning as traders continue to advance last week's gains. The uncertainty surrounding trade with China and ongoing trade war is once again being overshadowed by expected strong global demand due to the effect of swine fever in China and other Asian countries. Recent focus on the world impact on pork supplies and overall prices that is likely to develop is sparking increased price support in nearby trade. August futures are leading the complex higher with a $1.40 per cwt rally, setting the tone for firmer market direction as the week continues. Cash hog trade is called steady to $1 lower with most bids steady to weak. Open interest added 1,696 positions (309,243). June liquidated 4,915 positions (32,109) and July gained 2,926 positions (74,849). Cash lean index for 5/16 is $84.59 up $0.38. DTN projected slaughter for Monday is 466,000 head.

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

(BAS)

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