DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed trade seen in livestock trade focused on renewed underlying support moving through the live cattle trade, while early triple-digit losses have settled back into hog futures. Strong export sales of pork was not enough to rekindle buyer interest as traders continue to focus on the growing tensions with China. Corn markets are higher in light early trade. Stock markets are lower. Dow Jones is 392 points lower with Nasdaq down 118 points.

LIVE CATTLE:

Open: Mixed. Early buyer support is quickly moving through the live cattle complex following firm support from export sales reports, and cold storage reports. Beef supplies in April fell 5% from the month previous and 9% from year-ago levels. This quickly moved the focus of trades away from growing supplies, which are still expected, to the ability to move the added beef product through the system in domestic and export markets. Thursday's weekly export sales report posted new sales of 24,400 metric tons, for 2019. This is a 44% increase from the previous week, and indicating continued strong movement through late spring months. Cash cattle activity remains sluggish early Thursday morning following light to moderate trade in most areas Wednesday. Trade through the South was seen at $114 to $115 per cwt, $1 to $2 per cwt lower than last week. Trade in the North on a dressed basis was seen from $181 to $186 per cwt with most trade at $184 to $185 per cwt. This is steady to $1 per cwt lower than last week. Although some trade may develop through the rest of the week, the tone of the market seems to have been set, and most business needing to be done before the long holiday weekend is likely already in the books. Asking prices on cattle still left on showlists remain at $118 to $120 live and $186 and higher dressed. Open interest Wednesday added 2060 positions (381,855). Spot month June contracts lost 2,267 positions (63,365) and August contracts added 1,639 positions (150,443). DTN projected slaughter for Thursday is 122,000 head.

FEEDER CATTLE:

Open: Mixed. Limited market direction is seen through the feeder cattle complex with prices hovering from 25 cents lower to 35 cents higher. The dip in beef supplies reported in Wednesday's cold storage report has eased concerns of growing supplies as traders continue to focus on the ability to increased domestic and export demand for beef. Nearby feeder cattle futures are leading the narrow shift higher, but the focus on outside market moves and concerns of higher production costs will add even more volatility to the entire complex. Cash index for 5/21 is $132.16 down $0.09. Open interest Wednesday gained 400 positions (51,236).

LEAN HOGS:

Open: $1 to $1.50 lower. Firm underlying pressure seen through the lean hog futures complex at opening bell has sparked additional uncertainty through the entire complex. Although buyer support may develop through the rest of the Thursday session, the negative market reaction to increased export sales to China last week is troubling. Even though China sales totaled 31,400 metric tons, the underlying concern that the trade spat with China is becoming more active is causing traders to focus more on long term trade uncertainty, although the strong China sale should not be completely overlooked as having an impact in hog prices once emotion subsides. Cash hog trade is called steady to $2 lower with bids scattered through the entire range. Open interest added 519 positions (312,595). June liquidated 956 positions (28,318) and July slipped 24 positions (76,767). Cash lean index for 5/21 is $84.39, up 0.02. DTN projected slaughter for Thursday is 471,000 head. Saturday runs are expected near 41,000 head.

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

(CZ)

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