DTN Before The Bell-Livestock

Mixed Trade Keeps Volume Light

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

Limited market movement is seen in cattle trade early Tuesday morning with most trades focusing on outside markets, especially corn trade following the lower-than-normal planting progress. Hog futures have eased through morning activity with recent wide trading ranges opening the door for strong market swings, but little new direction to challenge technical trigger points. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 117 points higher with Nasdaq up 63 points.

LIVE CATTLE:

Open: Mixed. Live cattle futures are contained in very narrow ranges with prices hovering from 12 cents lower to 15 cents higher. The lack of direction in the complex is not surprising given the underlying focus on grain market support as well as pressure in feeder cattle trade. The overall complex is expected to remain lightly traded through the day with traders looking for very little fundamental or technical direction in which to spark active interest. As the week continues, traders will become much more focused on the direction of cash trade and wholesale beef values ahead of the holiday weekend and expected increased demand. Cash cattle markets are quiet Tuesday morning with bids and asking prices still generally unavailable. It is likely that a few bids and asking prices may trickle into the market through the day, but trade is likely to be delayed until Wednesday or later. Given the trend over the last several weeks, it would not be surprising if trade in the South developed on Wednesday, with Northern trade is delayed until sometime Thursday or Friday. Open interest Monday slipped 256 positions (380,982). Spot month June contracts lost 3,905 positions (69,089) and August contracts added 1,770 positions (147,522). DTN projected slaughter for Tuesday is 122,000 head.

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FEEDER CATTLE:

Open: Mixed. Limited pressure redeveloped through feeder cattle trade with continued support in grain trade the main focus of market weakness Tuesday. Following the weekly crop progress report Monday, which showed that corn planting, is at the lowest level on record for this date, concerns of further increased in feed and production costs are impacting most feeder cattle trade. Limited support is holding in front month May futures, although the rest of the complex holds moderate losses as trades focus more on outside markets than the fundamental or technical shifts in the specific cattle trade. Cash index for 5/16 is $132.76 up $0.33. Open interest Monday fell 85 positions (50,354).

LEAN HOGS:

Open: 50 to 80 cents lower. Firm pressure is moving through lean hog trade Tuesday morning following the mixed price moves and overall general lack of direction seen through the complex early in the week. Limited new market direction is seen through the week, with prices currently hovering within a wide $5 to $6 per cwt trading range that very likely could hold through the end of the month. Although the hog and pork complex continues to face major long term issues like the trade war with China and building global pork demand, the lack of new information may allow for markets to shift in a moderate to wide range without showing any significant market direction through the near future. Cash hog trade is called steady to $1 lower with bids scattered through the range. Open interest added 2,488 positions (311,188). June liquidated 1,465 positions (30,644) and July gained 2,004 positions (76,658). Cash lean index for 5/17 is $84.59, unchanged. DTN projected slaughter for Tuesday is 472,000 head. Saturday runs are expected near 43,000 head.

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

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Rick Kment