DTN Before The Bell-Livestock

GENERAL COMMENTS

Cattle and hog futures remain under pressure Friday morning with triple-digit losses in nearby trade causing for increased weakness through the entire complex. Lean hog futures are trading at or near $2 per cwt lower in nearby contracts after falling below short-term support levels and moving to lows not seen since early March. Corn markets are mixed in light trade. Stock markets are lower. Dow Jones is 16 points lower with NASDAQ down 34 points.

LIVE CATTLE:

Open: $1 lower. Sharp losses have quickly developed Friday morning in live cattle trade with widespread liquidation seen in all nearby trade. Spot contracts have quickly broken out of the recent sideways range, breaking through support levels of $102.80 in August contracts. This move is sparking technical pressure through the entire complex with all nearby contracts at or near $1 per cwt losses. Traders are also expected to try to adjust positions in front of the afternoon cattle on feed report, but at this point, the narrow shifts in cattle on feed numbers expected is expected to have little impact on the market compared to widespread liquidation seen through the morning. Cash cattle markets remain quiet following light to moderate trade Thursday in most areas. Prices shifted lower with cattle sold on live based at $110 in most cases, which is $1 to $2 per cwt lower. Dressed business developed at $180 to $181, $3 to $4 lower. Some cleanup activity is possible as the day continues, but prices are expected to be steady to weak with Thursday's price levels. Open interest Thursday slipped 833 positions (351,675). Spot month June contracts lost 2,487 positions (8,557) and August contracts fell 830 positions (148,404). DTN projected slaughter for Friday is 120,000 head.

FEEDER CATTLE:

Open: $2 Lower. Sharp follow-through pressure is flooding into feeder cattle trade. Even though corn markets are stable through the morning, traders continue to focus on the aggressive market pressure in the complex and renewed softness in live cattle trade. Cash index for 6/18 is $133.02 down $0.19. Open interest Thursday added 282 positions (48,538).

LEAN HOGS:

Open: $1 to $2 lower. Sharp underlying pressure quickly swept through lean hog trade Friday morning as traders broke through short-term support set last week. This once again puts lean hog futures at three-month lows, as most of the spring market rally associated with African swine fever has evaporated. Although there still remains a glimmer of hope that progress may be accomplished in next week's trade talks with China, the market seems to be looking past these levels and focusing on limited upcoming export demand over the coming months. With all nearby contracts falling below $80 per cwt, increased pressure is likely through the end of the week based on widespread liquidation. Cash hog trade is called steady to $1 lower with most bids steady. Open interest fell 278 positions (295,494). July fell 1,829 positions (28,819) and August added 47 positions (81,881). Cash lean index for 6/19 is $79.55, up 0.06. DTN projected slaughter for Friday is 471,000 head. Saturday runs are expected at 88,000 head.

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

(CZ)

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