DTN Before The Bell-Livestock

GENERAL COMMENTS

Firm support is developing across cattle and hog futures early Tuesday morning. Hog futures are leading the complex higher with initial gains of $1 per cwt higher in nearby trade as traders focus on a combination of technical support and recent gains in wholesale pork values. Corn markets are lower in light trade. Stock markets are higher. Dow Jones is 87 points higher with NASDAQ up 13 points.

LIVE CATTLE:

Open: Steady to 50 cents higher. Light to moderate gains have slowly developed in live cattle trade as traders focus on underlying market firmness and potential for increased technical support as nearby contracts test short term resistance levels. Beef in storage at the end of June fell 12% from year-ago levels, and 3% from the previous month. This is helping to add fundamental support to the entire complex and sparking expectations of additional gains. Cash cattle markets are still quiet early Tuesday morning with bids and asking price undeveloped. It is likely that a few token bids will start to be seen sometime through the day, but this is not expected to garner much attention at this point. A wide gap between asking prices and bids once they develop is likely as both sides attempt to shift the market to their position. This may limit any trade until the second half of the week. Open interest Monday fell 566 positions (322,730). Spot month August contracts lost 1,596 positions (52,736) and October contracts slipped 14 positions (146,949). DTN projected slaughter for Tuesday is 122,000 head.

FEEDER CATTLE:

Open: Steady to 50 cents lower. Limited pressure is slowly but steadily moving into feeder cattle trade as traders try to adjust positions following the aggressive triple-digit rally seen Monday. Although no change has developed in market fundamentals, the recent market shift higher is likely to draw some light to moderate price pressure through the entire complex as traders square positions and look for additional long-term market shifts over the next couple of weeks. Cash index for 7/19 is $138.16, down 0.49. Open interest Monday fell 374 positions (47,416).

LEAN HOGS:

Open: 30 cents to $1 higher. Firm underlying support is moving into the lean hog complex as a combination of commercial and noncommercial support is developing across the complex. This is advancing recent market gains, as prices have now testing June highs as active buyer support continues to move back into the complex. Even though pork in cold storage is 11% higher than year ago, active movement is seen with June totals slipping 1% from May levels. This continues to focus on the ability to actively and aggressively move pork product despite growing supply levels and active production. Cash hog trade is called $1 to $3 higher, with most bids $1 higher. Open interest added 566 positions (280,953). August fell 2,349 positions (31,828) and October fell 135 positions (100,081). Cash lean index for 7/19 is $73.27, up 0.83. DTN projected slaughter for Tuesday is 477,000 head. Saturday runs are expected at 9,000 head.

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

(CZ)

Copyright 2019 DTN/The Progressive Farmer. All rights reserved.