DTN Before The Bell-Livestock

Limited Volume Leaves Prices Mixed

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Initial gains in cattle trade have quickly started to erode as follow through selling is redeveloping. Prices are expected to remain mixed in a narrow to moderate range through most of the morning with very little additional market direction expected before the end of the week. Corn markets are higher in active early trade. Stock markets are lower. Dow Jones is 101 points lower with NASDAQ down 49 points.

LIVE CATTLE:

Open: Mixed. Firm initial gains have slowly eroded during early minutes of trade as position squaring moving into the complex seems to be overshadowed by continued market pressure at the end of the week. It is likely that prices will continue to shift higher and lower within a narrow to moderate range during most of the morning. Traders are encouraged by the expected increased access for export business to the European Union, but at this point it is giving very little market confidence of follow through support or long term price shifts. Cash cattle interest remains sluggish early Friday morning with a few bids redeveloping at $112 per cwt in Texas. Additional trade is likely in most areas through the day as reported numbers appear to be lighter than needed for weekly totals. Asking prices have adjusted to $114 and higher live and $187 and higher dressed. Open interest Thursday liquidated 1,932 positions (355,355). Spot month June contracts lost 1,100 positions (13,748) and August contracts fell 1,100 positions (150,380). DTN projected slaughter for Friday is 121,000 head.

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FEEDER CATTLE:

Open: Mixed. Narrow market shifts are developing Friday morning with a combination of short covering and follow-through pressure slowly developing in the complex. Although there is a desire to push prices higher at the end of the week, the underlying weakness in the complex is likely to limit buyer support through the rest of the day. This could lead to light to moderate pressure developing during most of the morning in many contracts. Cash index for 6/12 is $133.36 up $0.07. Open interest Thursday added 111 positions (48,205).

LEAN HOGS:

Open: Steady to 60 cents higher. Limited price support is redeveloping early Friday with nearby prices hovering from 20 to 60 cents higher during early trade. The focus on firm underlying support in all but July futures sparked underlying support through the end of the week. This firm start to the session has the opportunity to spark follow-through buyer interest as buyers have remained on the sidelines through much of the week given the daily back and forth shifts across the complex. A solid move higher at the end of the week would help to establish a firming market trend, potentially breaking out of the weakening price pattern seen over the last couple of months. Cash hog trade is called steady to $1 lower with most bids steady. Open interest fell 306 positions (307,827). June liquidated 430 positions (9,958) and July lost 6,302 positions (6,302). Cash lean index for 6/12 is $79.57, up 0.03. DTN projected slaughter for Friday is 473,000 head. Saturday runs are expected at 68,000 head.

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

(CZ)

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Rick Kment