DTN Before The Bell-Livestock

GENERAL COMMENTS

Light movement developed Tuesday morning with traders holding narrow but firm gains despite limited pre-holiday trade. The expectation that limited volume will be seen through the rest of the week could limit long-term market direction across all livestock markets. Corn markets are mixed in light trade. Stock markets are lower. Dow Jones is 37 points lower with NASDAQ down 4 points.

LIVE CATTLE:

Open: Steady to 40 higher. Moderate follow-through support is moving into live cattle trade. This is sparking increased underlying support through the entire complex, although volume is expected to remain subdued through the entire complex. Trades will continue to focus on outside market direction and the ability to bring additional support into beef values through the holiday week. Cash cattle activity remains quiet with only a few token bids seen in the South Tuesday morning at $107 per cwt. Asking prices are starting to develop at $110 and higher live basis. There appears to be a strong desire by both sides to trade cattle by the end of the day Wednesday, before the holiday break. Given the recent firmness in futures trade, it is unlikely that feeders will back away from asking prices anytime soon. Open interest Monday added 1,876 positions (351,833). Spot month August contracts lost 2,502 positions (137,863) and October contracts added 1,545 positions (100,932). DTN projected slaughter for Tuesday is 121,000 head.

FEEDER CATTLE:

Open: Mixed. Limited trade is seen Tuesday morning following steady price movements in new-crop corn prices. The continued pullback in grain grade over the last couple of sessions is adding renewed support to all cattle trade with the focus on limited feed price gains helping traders to focus more on beef market fundamentals instead of production cost uncertainty. Nearby futures have posted moderate gains of 40 to 50 cents per cwt in opening minutes of trade, although the tone of the complex remains sluggish. Cash index for 6/28 is $132.61 up $0.76. Open interest Monday added 326 positions (49,109).

LEAN HOGS:

Open: Steady to $1 higher. Firm underlying support is redeveloping in lean hog futures trade as technical support continues to be built after prices bounced off of support levels of $74 per cwt over the last week. The underlying support in the complex continues to be split between renewed optimism surrounding potential export trade with China through the end of the year and continued strong demand. Even though firm buyer interest is pushing prices higher, the potential that prices will hover with a $10 per cwt trading range between $75 and $85 per cwt becomes more likely and is expected to stimulate additional fundamental support through the upcoming summer months. Cash hog trade is called steady to $2 lower, with most bids steady. Open interest added 3.488 positions (298,510). July fell 1,062 positions (20,569) and August lost 572 positions (83,590). Cash lean index for 6/27 is $76,05, down 1.21. DTN projected slaughter for Tuesday is 477,000 head. Saturday runs are expected at 190,000 head.

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

(CZ)

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