DTN Early Word Opening Livestock

Cattle: Steady to $1 Higher   Futures: Mixed   Live Equiv: $140.59 -0.62* 
Hogs:   Steady to $1 Lower    Futures: Mixed   Lean Equiv: $ 76.43 -1.73**
 
*   based on formula estimating live cattle equivalent of gross packer revenue 
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Cash cattle traded developed Wednesday afternoon with light-to-moderate trade in most areas. Although there may be some clean-up trade on Friday, especially in the North, it is likely that the tone of the market is set. Both sides desired to get needed cattle sold before the holiday break, which may mean limited bids Friday morning. Cash cattle trade developed at $108 to $110, mostly $109 in the South, steady with last week, while at $178 to $182, mostly $180 in the North. Northern trade was generally $1 per cwt higher than last week. Futures trade is expected to remain sluggish also following the wild pre-holiday shift sparked by aggressive moves in grain trade. Renewed concern of aggressive corn price gains and the impact on short- and long-term production costs quickly influenced the limited trade volume. Overall interest in the market is expected to remain limited as many traders will likely remain out of the market following Thursday's Independence Day celebration. The limited activity could spark some wide price swings with the traders in the market adjusting positions in live cattle and feeder cattle trade.

Limited market direction is expected early Friday morning as market participation is likely to be sluggish through the end of the week. Quiet trade is expected in most markets as traders look for increased longer-term direction, but at this point, most traders seem willing to let current market trends ride until early next week. The firm underlying pressure in futures trade and softness in beef values will continue to add increased weakness through the entire complex. A mix of follow-through selling pressure is likely to be mixed by limited-to-moderate short-covering heading into the weekend. Cash trade is called steady to $1 lower Friday morning with most bids steady to weak. Expected slaughter Friday is at 445,000 head. Saturday runs are expected near 190,000 head.

	BULL SIDE		BEAR SIDE
1)	Firm underlying support in live cattle futures midweek is expected to help spark limited interest through the end of the week as technical support continues to develop during early July.	1)	Sharp gains in grain trade midweek is creating underlying bearishness through feeder cattle trade. This is likely to spark additional strong pressure during Friday's session.
2)	Steady to firm cash buyer support Wednesday is helping to rekindle buyer support through the cattle complex with the potential for firming cash values developing early next week.	2)	Trade volume is expected to be light with limited amounts of traders returning to the market following Thursday's holiday. This could lead to wide market swings.
3)	Total China pork imports in May are reported at 187,459 metric tons, according to Chinese Governments Customs Service. This is 63% above May 2018 levels, indicating continued need for pork in the Chinese market.	3)	Sharp losses in wholesale pork values during the week has created potential for widespread late week market pressure in futures trade based on general lack of pork primal support.
4)	Recent gains in lean hog futures have continued to expand buyer support. This creates the potential for increased technical buying to develop as traders shift away from long-term lows.	4)	Trade volume is expected to remain limited, leaving traders focusing on protection-taking ahead of the weekend. This could allow for additional wide market pressure Friday.

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

(BAS)

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