DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm gains have moved into cattle trade through the first few minutes of trade, as traders steadily move away from sharp market losses over the last week. Hog futures remain under pressure with continued demand concerns eroding any sense of stability. Corn markets are higher in light early trade. Stock markets are higher. Dow Jones is 235 points higher with NASDAQ up 57 points.

LIVE CATTLE:

Open: Steady to 50 cents higher. Light buyer support is moving into live cattle trade early Tuesday morning. The additional strong pressure seen early in the week quieted most of the focus on end-of-month adjustments, and sparked additional concerns of long-term price pressure developing surrounding demand uncertainty and growing beef supplies. Given that the complex is already at long-term lows, and extremely oversold, there is likely to be growing interest in moving prices firmly higher through the next couple of days, as traders cover short positions and focus on new trade interest moving into the complex. Cash cattle activity remains quiet early Tuesday morning following limited trade in the South at $113 per cwt. This is $2 per cwt lower than last week, which may set the tone for weaker cash cattle trade in all areas given continued pressure in beef values through the next couple of days. Open interest Monday fell 1,790 positions (374,945). Spot-month June contracts lost 4,254 positions (40,683) and August contracts added 1,616 positions (153,849). DTN projected slaughter for Tuesday is 122,000 head.

FEEDER CATTLE:

Open: Steady to $1 higher. Limited buyer support is seen early Tuesday morning following the inability to spark additional strong losses Monday. Although there still remains a lot of concern surrounding production costs and overall demand growth through the end of the year. The $8 to $10 per cwt price slide over the last week is leaving the door open for a moderate to firm market correction. There continues to be increased upside market potential through the entire complex which may allow for prices to shift $2 to $3 per cwt higher without significant resistance through the next few days. Cash index for 5/31 is $133.05 up $0.58. Open interest Monday fell 380 positions (50,012).

LEAN HOGS:

Open: Mixed. Limited price direction developed Tuesday morning following sharp early week losses. Nearby contracts are mostly lower with prices seen from 30 cents lower to 5 cents higher. Although limited support is expected through the morning, the lack of new information from either trade negotiations or overall supply changes domestically or worldwide seem to have neared support levels during early June. The ability for traders to build on current values over the next couple trading sessions will go a long way in sparking renewed commercial interest willing to step back into the complex. Cash hog trade is called steady to $1 lower with most bids steady to weak. Open interest lost 839 positions (313,935). June liquidated 1,612 positions (16,762) and July liquidated 637 positions (77,674). Cash lean index for 5/31 is $81.28, down 0.64. DTN projected slaughter for Tuesday is 477,000 head.

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

(CZ)

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