DTN Before The Bell Livestock

Strong Gains Redevelop Monday

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)

GENERAL COMMENTS:

Active support is seen in cattle trade early Monday with triple-digit moves seen in several nearby contracts in live cattle and feeder cattle markets. This will likely add increased underlying support although morning volume remains light. Corn prices are lower in light trade. Stock markets are higher. Dow Jones is 687 points higher with NASDAQ up 160 points.

LIVE CATTLE:

Open: 50 cents to $2.50 Higher. Strong gains are seen in spot June futures contracts as traders continue to quickly roll out of June futures and into the August and October contracts. The firm support of late-week cash market support is also helping to narrow cash basis levels due to support in all nearby contracts. Although nearby contracts are still unable to break above $100 per cwt, continued support over the next couple of days could help to break this price threshold, sparking potential follow through buyer support during the week. Cash cattle activity is expected to remain sluggish through most of the morning with show list distribution and inventory taking the main order of business for the day. Both sides are closely looking for the release of weekly average prices last week, which will give a little better indication of the market direction following another week of extremely wide trading ranges in each of the last two weeks. It is uncertain with the upcoming holiday weekend if trade will once again trickle through the week, or step up during the last half of the week. Open interest fell 3,371 positions (260,632). June contracts lost 7,324 positions (46,632) and August contracts added 1,762 positions (103,249). DTN projected slaughter for Monday is 93,000 head.

FEEDER CATTLE:

Open: Steady to $2 Higher. Triple-digit gains have slowly developed through the cattle market with August feeder cattle futures leading the market with a $1.75 per cwt rally. The underlying support seen through the entire complex continues to focus on the firm gains in spot live cattle trade and continued firmness through cash trade. There may be some additional underlying support developing midday, but so far, volume remains generally sluggish. Cash index for 5/14 is $124.80, up 0.85. Open interest Friday added 347 positions (29,424).

LEAN HOGS:

Open: Mixed. Initial support moved into nearby lean hog futures as traders focus on offsetting late-week pressure Friday. The overall consistency of adding 1,000 to 3,000 head to slaughter schedules seems to be helping to add a sense of calmness to the overall market although supplies of market ready hogs continue to be backed up. This could continue through the near future as traders seem to be looking more for consistency rather than the end to the recent struggles. Cash hog trade is called $1 lower to 50 cents higher. Most bids are steady. Open interest added 380 positions (209,889). June fell 2,541 positions (32,853) and July added 1,352 positions (58,077). Cash lean index for 5/14 is $68.70, down 0.17. DTN projected slaughter for Monday is 379,000 head.

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

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Rick Kment