DTN Before The Bell-Livestock

GENERAL COMMENTS

Light to moderate losses in hog futures develop Wednesday morning as traders focus on position squaring following triple-digit gains Tuesday. This could lead to continued mixed market shifts through the entire session. Corn markets are higher in light trade. Stock markets are higher. Dow Jones is 87 points higher with NASDAQ up 13 points.

LIVE CATTLE:

Open: Mixed. Narrow trading ranges are seen once again Wednesday morning with prices hovering in a mixed single-digit range. The firm support that has trickled into the complex through the week has continued to build steady but strong buyer support. There may be some additional underlying activity developing across the complex, although trade volume is expected to remain sluggish through most of the session. There may be some increased trade volume developing later Wednesday, as outside market direction will be a factor in follow-through support over the next few trading sessions. Cash cattle activity remains generally subdued Wednesday morning. A few early asking prices are seen at $113 live and $186 and higher dressed. At this point the only bids on the table are a few $109 bids in Texas as packers slowly start the ball rolling. It is possible that some trade may develop before the end of the day. But the current wide gap between bids and asking prices will have to narrow significantly. Open interest Tuesday gained 725 positions (323,526). Spot-month August contracts lost 1,900 positions (46,870) and October contracts added 1,911 positions (149,786). DTN projected slaughter for Wednesday is 122,000 head.

FEEDER CATTLE:

Open: Steady to 40 cents lower. Light follow-through pressure is slowly developing early Wednesday morning in feeder cattle trade although trade activity is held to a minimum at opening bell. Traders appear to be focusing on market stability near $142 per cwt in most nearby contracts with all remaining 2019 contracts narrowing the trading rap to 37 cents per cwt. The lack of premium in the complex continues to add concerns about the ability to spark additional underlying support seen during early July, establishing a well-defined sideways trend through the rest of the summer. Cash index for 7/22 is $136.94, down 1.20. Open interest Tuesday gained 127 positions (47,416).

LEAN HOGS:

Open: Steady to $1 lower. Moderate pressure slowly developed Wednesday morning in all lean hog trade as traders quickly broke away from the aggressive market gains Tuesday. This pull back in prices is not expected to change the bullish trend seen in the complex, but seen as a market correction following a generally unchecked $12 rally over the past two weeks. It is likely that as increased volume steps back into the complex Wednesday morning, that initial losses will soften, allowing for renewed buyer activity late in the session. Cash hog trade is called $1 to $2 higher, with most bids $1 higher. Open interest added 2,819 positions (283,129). August fell 2,752 positions (28,965) and October added 923 positions (100,857). Cash lean index for 7/22 is $74.29, up 1.02. DTN projected slaughter for Wednesday is 477,000 head. Saturday runs are expected at 9,000 head.

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

(CZ)

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