DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm pressure seen through the livestock complex is showing limited volume with moderate weakness holding in hog futures as cattle trade attempts to regain market support following Thursday's sharp losses. End-of-month positioning may develop through the session, but underlying weakness continues to be seen in livestock trade. Corn markets are lower in light early trade. Stock markets are lower. Dow Jones is 294 points lower with NASDAQ down 98 points.

LIVE CATTLE:

Open: Mixed. Live cattle futures have hovered in a narrowly mixed trading range through much of the morning. This may add increased uncertainty through the complex, as a generally weak market tone still exists. Following immediate losses at opening bell, the tone of the market is stabilizing with late-week buying moving into the complex. Prices are likely to hold a narrow trading pattern through most of the complex following early losses in grain trade, and an attempt to regain market stability at the end of the session. August futures are trading 10 cents per cwt lower, which a close at this level would set new contract lows, and likely spark additional underlying weakness through the entire cattle complex. Cash cattle business may be done for the week in many areas following moderate trade Wednesday and Thursday. Live Southern trade traded at $115 once again Thursday, steady with last week, and initial Wednesday trade. Dressed trade in the North picked up late Thursday with trade at $186 to $187 per cwt (mostly $186), $1.50 per cwt lower than last week. Bids are undeveloped Friday morning, with asking prices on any cattle left on showlists at $116 to $117 live and $188 dressed. Open interest Thursday slipped 1,756 positions (374,719). Spot month June contracts lost 2,830 positions (46,841) and August contracts added 464 positions (151,311). DTN projected slaughter for Friday is 120,000 head.

FEEDER CATTLE:

Open: Mixed. Firm follow-through selling actively moved into feeder cattle at opening bell. But this weakness was short-lived as buyers reacted to lower corn prices Friday morning, and tried to bring some stability into the complex at the end of the week. Nearby contracts are holding gains of 50 cents to $1 per cwt. Continued pressure in grain trade through the morning is expected to solidify additional buyer interest, although at this point there seems limited upside market potential due to strong fears of unknown long term production costs and feed supply availability. Cash index for 5/29 is $135.00 down $1.65. Open interest Thursday added 401 positions (50,536).

LEAN HOGS:

Open: 50 cents to $1.50 lower. Active follow-through pressure continues to be seen in lean hog futures trade Friday morning as traders continue to back out of the market. Even though additional export sales were reported to China at the end of last week, traders remain concerned about the long-term direction of the market. Weekly sales of 39,100 metric tons were reported to China with 4,200 metric tons shipped through the week. This pushed the total commitments to China for the season at 234,300 metric tons. The announcement from the Trump Administration on Thursday that a 5% tariff would be placed on all imports from China in relation to illegal immigration will likely have weakening impact on pork prices as this may strain the trade relationship with our Southern neighbor. Currently seasonal commitments to Mexico are at 201,900 metric tons, just shy of commitments from China, but still a major player in the pork export industry. Cash hog trade is called steady to $2 lower with most bids steady to $1 lower. Open interest lost 603 positions (317,448). June liquidated 2,197 positions (19,941) and July gained 255 positions (80,346). Cash lean index for 5/29 is $82.22, down 0.34. DTN projected slaughter for Friday is 470,000 head. Saturday runs are expected near 253,000 head.

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

(CZ)

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