DTN Before The Bell-Livestock

GENERAL COMMENTS

Livestock futures have shifted lower with active pressure in feeder cattle and hog trade. There continues to be increased market softness as traders try to balance livestock trade with the continued surges in grain trade. Corn markets are higher in light early trade. Stock markets are lower. Dow Jones is 264 points lower with NASDAQ down 62 points.

LIVE CATTLE:

Open: Steady to 50 cents lower. Light pressure has continued to slowly develop through the live cattle complex with increased softness focusing on active losses in feeder cattle trade. There is expected to be limited market pressure through most of the morning Wednesday as traders look for cash market developments while recent gains in beef cutout value is expected to bring some increased market volume through the end of the week. Cash cattle markets remain sluggish with limited overall interest shown from either side. Packer interest is likely to show limited improvement through the day, although it is uncertain if the recent trend of Wednesday trade will continue in the South given the late holiday start to the week. Most of the trade is likely to be delayed until later in the week, but some initial interest should attempt to surface through early morning trade. Asking prices are likely to develop at $117 and higher live and $188 and higher dressed. Open interest Tuesday slipped 2,670 positions (379,205). Spot month June contracts lost 3,938 positions (54,867) and August contracts slipped 189 positions (151,867). DTN projected slaughter for Wednesday is 121,000 head.

FEEDER CATTLE:

Open: $1 Lower. Sharp losses have redeveloped in feeder cattle trade with the focus on grain market gains has quickly sparked market pressure in feeder cattle trade. Another double-digit rally Wednesday morning in both corn and soybean markets has sparked additional liquidation through all feeder cattle trade. This is not only affecting futures trade, but the pressure in cash markets is likely to continue focusing on increased production costs and overall uncertainty of long term corn supply. Cash index for 5/27 is $136.55 up $0.50. Open interest Tuesday fell 1,769 positions (49,710).

LEAN HOGS:

Open: 50 cents to $1 lower. Firm pressure is redeveloping Wednesday morning as continued liquidation develops across the complex. This is holding nearby contracts 80 to 90 cents per cwt lower with increased softness as traders search for support through the entire market complex but also remain concerned about long-term direction of the market following the concerns surrounding trade with China and overall global pork exports. Cash hog trade is called steady to $3 lower with most bids 50 cents to $1 lower. Open interest added 2,789 positions (317,800). June liquidated 1,550 positions (24,262) and July gained 996 positions (80,016). Cash lean index for 5/24 is $83.31, down 0.71. DTN projected slaughter for Tuesday is 475,000 head. Saturday runs are expected near 225,000 head.

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

(CZ)

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