DTN Before The Bell-Livestock

GENERAL COMMENTS

Activity is limited early Thursday morning with traders adjusting positions due to the light morning volume. Mixed trade is holding in cattle contracts, while moderate to firm losses in hog futures are pulling back from the triple-digit midweek rally. Corn markets are lower in light trade. Stock markets are lower. Dow Jones is 70 points lower with NASDAQ down 15 points.

LIVE CATTLE:

Open: Mixed. Narrow trading ranges have developed in live cattle futures as initially higher prices which were focused on market adjustments have lost momentum. Live cattle futures are 20 cents lower to 15 cents higher in the first few minutes of trade. There will be more focus on outside market direction and limited trading ahead of the Cattle on Feed and Cattle Inventory reports Friday. This is not expected to cause significant price shifts, but could limit active support over the near future. Cash cattle interest should become more focused through Thursday, especially across the north. Light cash trade Wednesday may have already set the tone, especially in the South, with prices at $111 per cwt. This is steady to $1 lower than last week. The limited Northern trade seen Wednesday sold at mostly $183 per cwt, steady with last week. Asking prices are holding at $114 live and $186 dressed at this point. Open interest Wednesday lost 1,130 positions (327,101). Spot-month August contracts lost 4,011 positions (57,763) and October contracts added 466 positions (146,385). DTN projected slaughter for Thursday is 121,000 head.

FEEDER CATTLE:

Open: Mixed. Light to moderate support is seen in nearby feeder cattle futures as traders adjust from midweek losses. Most of the focus early Thursday is driven by short-covering as traders continue to focus on increased hot temperatures through most of the week. Although weather conditions had little impact on cattle trade early in the week, the longer the hot spell lasts, the more cumulative impact it is expected to have on cattle. Cash index for 7/16 is $141.01, down 0.08. Open interest Wednesday lost 364 positions (47,892).

LEAN HOGS:

Open: Steady to $0.60 lower. Limited pressure slowly trickled into lean hog futures as traders take positions following the sharp market rally developing Wednesday. The tone of the market remains firm with underlying commercial and noncommercial buying support still holding late in the week. Traders are focusing on a late-week market correction due to limited morning trade. Cash hog trade is called steady to $1 higher, with most bids 50 cents to $1 higher. Open interest fell 3,379 positions (280,807). August fell 2,247 positions (42,056) and October added 432 positions (95,026). Cash lean index for 7/16 is $70.79, up 0.17. DTN projected slaughter for Thursday is 476,000 head. Saturday runs are expected at 17,000 head.

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

(CZ)

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