DTN Before The Bell-Livestock

Mixed Trade Have Traders Looking for Stability

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

Mixed price levels are seen early Monday with narrow to moderate gains in nearby live cattle offset by continued pressure in hog trade. The overall lack of fundamental and technical support in hog futures may add pressure through the session Monday. Corn markets are higher in light trade. Stock markets are higher. Dow Jones is 63 points higher with NASDAQ up 2 points.

LIVE CATTLE:

Open: Mixed. Light to moderate gains have developed in nearby live cattle trade following narrow market swings early Monday. Even though cattle inventory in Friday's report posted a 2% gain from year-ago levels, traders are viewing this as generally neutral at this point, given the overall bearish structure of the market over the last week. It is expected that trade will remain sluggish through most of the morning with narrow gains in nearby trade offset by light to moderate pressure in deferred contract months as traders focus on long-term supply issues which will continue to curb market support over the next year. Cash cattle activity is expected to remain extremely sluggish Monday following the market erosion and very limited activity last week. Show list distribution and inventory taking are expected to be the extent of market movement through the day, although the potential for midweek sales is strong given the short-bought status of the complex. Open interest Friday slipped 497 positions (348,675). Spot month June contracts lost 2,487 positions (8,557) and August contracts fell 830 positions (148,404). DTN projected slaughter for Monday is 121,000 head.

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FEEDER CATTLE:

Open: Steady to 50 cents lower. Limited softness is seen in feeder cattle trade early Monday morning. Traders have backed away from the triple-digit losses seen late last week, as the focus on firm live cattle trade is helping to support buyer interest. Narrow gains in corn prices is adding to the pressure, but so far, traders are searching for market stability early Monday. Cash index for 6/18 is $133.02 down $0.19. Open interest Friday added 205 positions (48,938).

LEAN HOGS:

Open: $1 lower. Follow-through pressure is trickling into the complex, although the tone of the market remains extremely sluggish early Monday. Traders remain concerned about current production levels and the lack of support in wholesale pork values. Although some hope is still being placed on trade talks with China this week, the overall market attitude is not expecting any significant results at this point. This is likely to add increased pressure to the entire complex. Cash hog trade is called steady to $2 lower with most bids steady to $1 lower. Open interest added 137 positions (294,925). July fell 2,247 positions (26,499) and August added 1,654 positions (83,881). Cash lean index for 6/19 is $79.55, up 0.06. DTN projected slaughter for Monday is 450,000 head.

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

(CZ)

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Rick Kment