DTN Before The Bell-Livestock

GENERAL COMMENTS

Active buyer support moved into lean hog and live cattle trade Friday morning. This helped to rekindle interest following sharp pressure Thursday in hog trade. The underlying focus on technical support in both markets is helping to bring renewed end of the week interest to the complex. Feeder cattle futures are under pressure following active gains in corn trade Friday. Corn markets are higher in light trade. Stock markets are higher. Dow Jones is 123 points higher with NASDAQ up 22 points.

LIVE CATTLE:

Open: Steady to $1 higher. Firm follow-through support is quickly moving into live cattle trade Friday morning. Underlying support has moved nearby contracts 70 to 80 cents per cwt higher during early trade. The current gains have moved prices to two-month highs, as October futures have now broken through $110 per cwt. Continued technical support is steadily developing across live cattle trade, which is likely to spark additional late-week buyer support by the end of the Friday session. Cash cattle interest is expected to improve through the morning with packers likely to float more bids, especially in the South. The South has been extremely quiet all week, but at least limited light trade is still expected to develop in Kansas and Texas before the end of the week. Limited movement in the North helped to support cash values, but more activity is expected, which could push prices firmly higher from last week's levels. Open interest Thursday lost 1,031 positions (332,417). Spot month August contracts lost 9,265 positions (81,937) and October contracts added 8,060 positions (131,525). DTN projected slaughter for Friday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Initial market support moved into the complex, but short-lived as traders continue to focus on the gains seen in corn trade Friday morning. Although the underlying tone of the feeder cattle has seen significant support over the last week, continued gains in feed prices has a negative impact on the overall feeder cattle complex. Trade is expected to be light to moderate through most of the session with increased underlying support developing in live cattle trade. This should help to soften morning losses by closing bell, but the wide market swings over the last week may add to the volatility across the complex. Cash index for 7/10 is $139.32, up 3.56. Open interest Thursday lost 201 positions (48,955).

LEAN HOGS:

Open: Steady to $1 higher. Light to moderate buyer support is slowly but steadily developing Friday morning as nearby contracts are holding $1 per cwt gains in the early minutes of trade. The underlying firm tone seen earlier in the week has offset the aggressive triple-digit losses seen Thursday. There may be additional support moving back into the complex, as a strong market rally at the end of the week would help to bring additional stability to the market. All active support is seen in August through December contracts with early trade mixed following the firmer opening price shifts. Cash hog trade is called $1 lower to 50 cents higher, with most bids steady to weak. Open interest added 1,552 positions (282,773). July fell 803 positions (11,598) and August lost 6,919 positions (54,930). Cash lean index for 7/10 is $70.65, down 0.12. DTN projected slaughter for Friday is 465,000 head. Saturday runs are expected at 38,000 head.

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

(CZ)

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