DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm gains have continued to develop in all livestock trade following a strong shift in direction Tuesday. This helped to spark underlying commercial interest moving into the complex. Triple-digit gains in feeder cattle continue to lead the complex higher during initial activity. Corn markets are lower in light trade. Stock markets are higher. Dow Jones is 48 points lower with NASDAQ up 67 points.

LIVE CATTLE:

Open: Steady to 70 cents higher. Steady buyer support is moving back into live cattle trade Wednesday morning as the upward movement in the complex continues to be more focused on combined technical and fundamental support developing in the complex. August live cattle futures are holding 72 cent gains during early trade, helping to establish market stability and actively moving prices off of contract lows. Although sharp upside market shifts may not be seen, the potential for steady growth over the next couple of weeks could help to solidify market support. Cash cattle interest remains limited, although a few bids have redeveloped Wednesday morning in the same range as Tuesday at $107 live and $174 dressed. This may spark some increased interest through the day although it is uncertain if feeders will be willing to sell at this point and wait until later in the week. Asking prices remain hard to fully define, but around $110 to $112 live and $180 to $182 dressed. Open interest Tuesday gained 1,193 positions (349,659). Spot month June contracts lost 865 positions (3,418) and August contracts added 640 positions (146,668). DTN projected slaughter for Wednesday is 122,000 head.

FEEDER CATTLE:

Open: $1 higher. Feeder cattle futures have quickly backed away from recent market pressure as buyers have quickly moved into the complex. This may spark some additional underlying support through the entire complex, resulting in triple-digit gains moving into the complex Wednesday morning, although little has changed in the grain complex or beef market fundamentals, the lack of follow-through selling pressure due to the severely oversold market status is creating a technical market shift, adding to potential late-week gains. Cash index for 6/24 is $131.46 up $0.05. Open interest Tuesday lost 6 positions (49,528).

LEAN HOGS:

Open: Mixed. A combination between early-morning position adjustments and follow through buying is seen in lean hog trade with most contracts shaking off initial pressure, posting moderate gains Wednesday morning. Continued support through the session may be the spark that is needed to move away from the aggressive market pressure over the last week, and rekindle commercial buyer interest before month's end. August futures remain firmly higher with a 30 cent gain, although more focused buying is seen in deferred contracts as prices are holding gains near $1 per cwt Wednesday. The announcement by China to suspend meat imports from Canada, is expected to be generally bullish for U.S. meat products. But with the ongoing trade war, China has made a deliberate point to purchase pork products elsewhere. This buying activity is not likely to change over the near future unless progress is made on a trade deal. Cash hog trade is called steady to $2 lower with most bids steady to $1 lower. Open interest fell 522 positions (296,219). July fell 1,445 positions (25,124) and August added 2,429 positions (85,703). Cash lean index for 6/24 is $78.31, down 0.34. DTN projected slaughter for Wednesday is 477,000 head. Saturday runs are expected at 57,000 head.

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

(CZ)

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