DTN Before The Bell Livestock

GENERAL COMMENTS:

Active gains quickly moved into the complex as traders tried to cover aggressive short positions set Monday. But buyer interest quickly ran out of gas, leaving prices mixed within early trade. This could lead to additional pressure through the Tuesday session. Corn prices are lower in light trade. Stock markets are mixed. Dow Jones is 42 points higher with NASDAQ down 29 points.

LIVE CATTLE:

Open: Mixed. Buying support quickly moved back into live cattle trade early Tuesday morning. The focus on short-covering activity due to limit losses Monday was short lived as follow-through selling pressure developed in most deferred contracts. This could add some additional bearish market shifts to the complex as traders look for increased uncertainty through the entire complex. Cash cattle markets are expected to remain extremely sluggish given the overall lack of certainty as to how many additional cattle will move through packing plants over the next couple of weeks. The fact that previously committed cattle are already backed up in the system could limit the amount of cattle needed to be purchased even though packers are focusing on increasing overall cattle flows through plants. Active trade may be delayed until later in the week, although interest from both sides should start to develop over the next couple of days. Open interest lost 4,171 positions (262,946). June contracts lost 8,111 positions (76,299) and August contracts added 1,871 positions (86,058). DTN projected slaughter for Tuesday is 87,000 head.

FEEDER CATTLE:

Open: Steady to $1 higher. Feeder cattle prices have bounced back from early-week losses, but the underlying tone of the market still remains weak as initial price support Tuesday morning may be unable to be held through the rest of the day. This could add even more uncertainty to the complex given the underlying softness in price levels as traders look for increased direction from cash and futures moves in live cattle trade. Cash index for 5/8 is $122.60, up 1.46. Open interest Monday fell 209 positions (30,015).

LEAN HOGS:

Open: Mixed. Initial short covering seen early Tuesday morning quickly eroded as June futures remain the only actively traded nearby contract to hold market gains during the first few minutes of trade. The concern that growing numbers of market ready hogs will still sharply impact the ability to sustain and grow cash and futures price levels from current levels may add even more pressure to markets through the end of the morning. Cash hog trade is called 50 cents lower to 50 cents higher. Most bids are steady to firm. Open interest fell 408 positions (200,191). June fell 4,734 positions (45,217) and July added 2,930 positions (43,762). Cash lean index for 5/8 is $67.75, up 0.75. DTN projected slaughter for Tuesday is 363,000 head. Saturday runs are expected near 189,000 head.

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

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