DTN Before The Bell-Livestock

GENERAL COMMENTS

Mixed trade is seen Friday as traders appear to be holding current trading ranges with limited direction developing during early trade. This may spark additional underlying support in live and feeder cattle trade based on softness in grain futures. Moderate pressure is holding in lean hog trade as traders remain concerned about long term demand due to trade issues. Corn markets are lower in light early trade. Stock markets are higher. Dow Jones is 197 points higher with NASDAQ up 78 points.

LIVE CATTLE:

Open: Steady to 40 cents higher. Limited support is slowly but steadily moving through the live cattle complex. This is adding confidence following a $2 per cwt rally in nearby contracts over the last couple of days. Tight trading ranges of 35 to 40 cents per cwt are seen in all nearby contracts in opening trade, although the focus on end-of-week positioning appears to be the main driver through the entire complex. Cash cattle activity remains quiet Friday morning with bids undeveloped at this point. Business is likely done in the South, but the limited number of cattle reported sold in the North should allow for additional dressed trade before the end of the week. Dressed trade seen Thursday developed at $183 to $184 on most sales, $2.50 to $3.50 per cwt lower than last week. Live trade in the South trickled in through the week at $112 to $113, $2 to $3 lower than last week. Asking prices are at $114 live and $185 dressed. Open interest Thursday added 1,272 positions (373,958). Spot-month June contracts lost 1,781 positions (29,817) and August contracts added 681 positions (156,107). DTN projected slaughter for Friday is 120,000 head.

FEEDER CATTLE:

Open: Mixed. Light buyer support trickled into nearby feeder cattle trade with August futures holding a 47 cent gain following opening bell. The firm support in live cattle trade Friday morning combined by additional softness in corn futures has allowed for end-of-week positioning to develop. Limited fundamental or technical direction is expected to develop Friday as prices may be confined to a narrow trading range with traders content to wait until next week before additional market shifts seen through the complex. Given the aggressive gains during the week, the potential for a late-week market correction is developing, if buying slows through the end of the session. Cash index for 6/5 is $131.73 down $0.15. Open interest Thursday fell 20 positions (48,539).

LEAN HOGS:

Open: Mixed. Initial trade developed mixed to mostly lower with light to moderate pressure developing in July through December contracts. Even though traders remain encouraged by firm domestic demand and recent sales to China, the underlying concern that trade relations with China and Mexico will not quickly improve is limiting late-week buying. July futures are holding losses of $1 per cwt Friday morning with potential for follow-through weakness to filter in during late-week trade. Cash hog trade is called steady to $1 lower with most bids steady to 50 cents lower. Open interest added 2,006 positions (316,620). June liquidated 614 positions (2,204) and July liquidated 2,204 positions (71,878). Cash lean index for 6/5 is $80.56, down 0.11. DTN projected slaughter for Friday is 464,000 head. Saturday runs are expected at 50,000 head.

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

(CZ)

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