DTN Before The Bell-Livestock

Mixed Trade Limits Early Volume

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

Mixed trade is seen early Thursday morning as traders quickly react to sharp cattle market gains midweek. This shift between follow-through buying and post rally position taking may keep most prices mixed through Thursday morning. Corn markets are lower in light trade. Stock markets are mixed. Dow Jones is 38 points lower with NASDAQ up 47 points.

LIVE CATTLE:

Open: Steady to 30 higher. Firm underlying support is trickling back into the market, but limited upward movement is seen due to light volume. Sharp gains midweek is creating additional expectations of further market support through the entire complex. But trade interest may remain sluggish thorugh the end of the week, allowing for recent gains to establish a more moderate trading range at the higher price levels. Cash cattle interest remains quiet with a few bids being shown at $107 to $108 live and $175 dressed in the North. Most of the country remains extremely quiet Thursday morning. Asking prices remain well above these levels with feeders likely unwilling to offer cattle near these bids at this point. It is still unknown how many cattle are actually needed through the end of the week given previous buying done and the upcoming holiday weekend limiting plant schedules. Packers should become more aggressive as the day continues, but light scattered trade over the next couple of days may be the extent of cash market activity. Open interest Wednesday gained 754 positions (351,331). Spot month June contracts lost 1,064 positions (1,424) and August contracts slipped 948 positions (146,668). DTN projected slaughter for Thursday is 121,000 head.

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FEEDER CATTLE:

Open: Mixed. Limited activity is seen Thursday morning as traders react to the sharp gains seen midweek. This overall lack of follow-through buying interest Thursday morning is raising questions about additional market support through the end of the month. But the tone of the market may continue to firm as additional volume moves into the complex. The potential to keep prices in a narrow trading range through the morning may help to spark long term interest move back into the complex as traders attempt to establish firm trading ranges at the new, but higher price levels. Cash index for 6/24 is $131.46 up $0.05. Open interest Wednesday added 405 positions (49,928).

LEAN HOGS:

Open: Mixed. Light buyer support is trickling into the complex with market direction firming Thursday morning. Traders seem to be focused on slow but steady growth during early trade with most contracts holding 15 to 40 cent gains. Although continued pressure is seen in pork values and cash markets, limited downside pressure is expected through the end of the week. This could help bring renewed support back to the complex over the near future, while traders continue to focus on building underlying buyer interest with prices hovering above long-term support levels. Cash hog trade is called $1 to $2 lower bids scattered through the range. Open interest fell 109 positions (295,377). July fell 267 positions (24,124) and August lost 188 positions (85,703). Cash lean index for 6/25 is $77.91, down 0.40. DTN projected slaughter for Thursday 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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Rick Kment