DTN Before The Bell-Livestock

GENERAL COMMENTS

Trade remains mixed in a narrow range in cattle and hog futures with limited direction expected through most of the morning. The upcoming cattle on feed report and cattle inventory report may create additional pre-report adjustments, but generally volume is expected to remain light Friday. Corn markets are higher in light trade. Stock markets are higher. Dow Jones is 62 points higher with NASDAQ up 34 points.

LIVE CATTLE:

Open: Mixed. Live cattle trade is hovering in a narrowly mixed trading range from 7 cents lower to 12 cents higher. The lack of direction Friday morning is likely to keep markets subdued through the first half of the morning. Outside markets seem to remain generally calm through the first few minutes of trade, which may also limit spillover activity late in the week. The main focus through the cattle complex will be the release of the Cattle on Feed report, and semi-annual cattle inventory report. This will be released after markets close at 2 p.m. Friday afternoon. Although some additional positioning may take place through the day before the report, the potential for market shifts is greatest early next week when traders have the entire weekend to mull over the numbers before getting a chance to trade the report. Cash cattle business is expected to be generally finished for the week following light to moderate trade that trickled into the market over the last two days. Trade developed in the North at $182 to $185, although most trade was seen at $183 per cwt. This is generally steady with last week. Southern live trade developed at $111 per cwt, steady to $1 lower than last week. There is the potential for some clean-up trade, especially surrounding the cattle reports at 2 p.m., but any cattle that are sold are not expected to change the tone of the market at this point. A few bids have redeveloped at $111 in the South through the morning Friday. Asking prices are at $112 to $113 live and $185 dressed early Friday morning. Open interest Thursday lost 2,723 positions (323,951). Spot month August contracts lost 4,944 positions (52,736) and October contracts added 707 positions (146,949). DTN projected slaughter for Friday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Sluggish activity is seen through the complex Friday morning with prices are trading in a narrow range from 40 cents lower to 20 cents higher at opening bell. The underlying pressure seen over the last couple of trading sessions continues to focus on a weaker market trend through the complex. With light to moderate support redeveloping in corn trade Friday morning, traders are becoming even more focused on potential long term pressure in the complex based on higher feed prices and general uncertainty of corn production through the year. The increased variability across the Corn Belt ranges from active flooding and waterlogged conditions in some areas, while others are dealing with hot and dry conditions that will also severely impact production. Cash index for 7/17 is $140.00, down 1.01. Open interest Thursday added 122 positions (48,006).

LEAN HOGS:

Open: Mixed. Light pressure is developing Friday morning with traders focusing on end-of-week positioning during the first few minutes of trade. Nearby losses remain limited from 2 to 12 cents per cwt, although the expectation that limited spill over buyer support in deferred trade may hold through most of the morning. Sluggish activity is likely to be seen through the entire session as traders are more focused on market adjustments given very little new outside market direction. Cash hog trade is called steady to $1 higher, with most bids $1 higher. Open interest fell 6,755 positions (273,297). August fell 5,706 positions (36,365) and October added 2,215 positions (97,092). Cash lean index for 7/17 is $71.52, up 0.73. DTN projected slaughter for Friday is 467,000 head. Saturday runs are expected at 17,000 head.

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

(CZ)

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