DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures are under pressure Wednesday morning. Traders focus on continued uncertainty regarding trade with China, as well as potential growth in cattle supplies. Limited volume noted during early trade, although the tone of the complex remains weak. Corn markets are higher in light early trade. Stock markets are lower. Dow Jones is 47 points lower with Nasdaq down 10 points.

LIVE CATTLE:

Open: Steady to 50 cents lower. Light to moderate follow-through pressure through live cattle trade with action focusing on growing cattle supplies and uncertainty as to the amount of additional demand through the next several months. Even though the decision by Japan to drop age restrictions on U.S. beef will spark longer-term growth, the ability to supply domestic and export markets seems well in hand with cattle in feed yards, as well as those expected to be placed through the next couple of months. This may limit upside potential for live cattle futures over the near future. Cash cattle interest remains subdued Wednesday morning with bids still hard to pin down in most areas. A few cattle sold late Tuesday at $115 live and $185 dressed, but this is not enough to set a tone for the week. Increased packer interest is likely through the day with light-to-moderate trade possible in the South before late afternoon. Asking prices expected to develop near $120 live and $190 dressed. Open interest Tuesday slipped 432 positions (380,260). Spot month June contracts lost 3,083 positions (65,882) and August contracts added 1,480 positions (148,903). DTN projected slaughter for Wednesday is 121,000 head.

FEEDER CATTLE:

Open: 50 cents to $1 lower. Moderate-to-firm pressure moving into feeder cattle trade with follow-through weakness developing Wednesday morning. Traders are once again concerned following early estimates for the Cattle on Feed report. Traders already know supply remains readily available heading into summer; on top of that, estimates are that cattle placements in April could have been nearly 15% above year ago levels. This would likely spark additional underlying pressure through the entire complex, even though traders have already factored in growing numbers over the last several weeks. Cash index for 5/20 is $132.17 up $0.35. Open interest Tuesday gained 442 positions (50,842).

LEAN HOGS:

Open: 20 to 60 cents lower. Light-to-moderate follow-through pressure is developing in lean hog trade with increased focus on overall uncertainty about a trade deal with China. There are plenty of news reports over the last few days focusing on all of the potential impacts of further talks and it appears there is very little consensus on if and when a trade deal will develop. This is limiting hope despite the apparent need for China to gain access to additional pork. It is interesting that since the last trade talks concluded between the two countries, no additional or new news concerning Asian swine fever outbreaks in China or overall numbers of hogs recently affected has developed. The ASF situation in China and other areas around the world is a real and significant threat to pork production and nutrition needs, but possible political motives behind released information have many wondering: What is the current situation of pork production and product needs in China? Cash hog trade is called steady to $1 lower with most bids steady. Open interest added 1,901 positions (312,521). June liquidated 1,363 positions (29,297) and July gained 642 positions (77,036). Cash lean index for 5/20 is $84.37, down 0.22. DTN projected slaughter for Wednesday is 466,000 head. Saturday runs are expected near 43,000 head.

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

(CZ)

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