DTN Before The Bell-Livestock

GENERAL COMMENTS

Limited trade is developing Wednesday morning with mixed market moves seen in cattle and hog futures through the opening minutes of trade. This lack of active direction may spark renewed interest later in the session, but markets are likely to remain stuck in current ranges for the short term. Corn markets are lower in light trade. Stock markets are mixed. Dow Jones is 59 points higher with NASDAQ down 7 points.

LIVE CATTLE:

Open: Mixed. Early live cattle trade is hovering in a narrow range on either side of unchanged with initial pressure in nearby contracts offset by sluggish buyer activity in the rest of the complex. Traders remain concerned about the lack of support in beef values and sluggish direction of cash trade through the week. But this is likely to have limited pressure as prices remain stuck in the moderate to wide sideways trading range with freedom to bounce $1 to $2 per cwt higher or lower without signaling any technical or fundamental market shifts. Cash cattle markets remain generally quiet. A few bids have redeveloped at $109 per cwt in Texas, but the rest of the market remains undeveloped. Asking prices remain firm at $112 to $115 live and $185 and higher dressed. Open interest Tuesday liquidated 1,894 positions (352,252). Spot month June contracts lost 1,121 positions (10,244) and August contracts fell 1,571 positions (149,404). DTN projected slaughter for Wednesday is 122,000 head.

FEEDER CATTLE:

Open: Steady to 20 cents higher. Narrow trading ranges are seen across the feeder cattle complex with most contracts 15 to 20 cents per cwt higher during early trade. The softness in corn markets is allowing for buyers to slowly but cautiously move back into the complex, but there still remains increased uncertainty about price potential in the near future. Limited volume is expected most of the morning, which could leave prices generally stable Wednesday. Cash index for 6/17 is $133.21 down $0.34. Open interest Tuesday fell 229 positions (48,205).

LEAN HOGS:

Open: Mixed. Light to moderate buyer support is slowly but steadily moving into nearby lean hog trade Wednesday morning as traders focus on the potential to bring additional stability to the complex through the rest of the week. The pressure in deferred contracts at opening bell is expected to minimize any bullish market support as late 2019 and early 2020 contracts are getting caught up in position taking following recent market gains. The ability for buyers to remain established through the morning and continue to push prices away from support levels near $80 per cwt will build increased underlying confidence through the entire complex. Cash hog trade is called $1 lower to $1 higher with most bids steady to firm. Open interest fell 1,621 positions (306,488). June reduced 4,281 positions (4,879) and July lost 2,121 positions (34,830). Cash lean index for 6/17 is $79.26, down 0.01. DTN projected slaughter for Wednesday is 477,000 head. Saturday runs are expected at 88,000 head.

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

(CZ)

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