DTN Before The Bell Livestock

GENERAL COMMENTS:

Sharp losses in hog futures has sparked uncertainty in all livestock markets as cattle futures backing away from session highs early in the trading day with concerns that additional pressure may develop. Corn futures are trading higher in light trade. Stock markets are higher in limited morning trade. Dow Jones is 88 points higher with NASDAQ up 25 points.

LIVE CATTLE:

Open: Mixed. Even though prices bounced higher at opening bell based on spillover follow-through support, the changing tone in the market is causing for mixed market moves during early trade. This may add even more uncertainty through the entire complex, as traders could focus on growing concerns with China and future trade levels. The increased slaughter levels are slowly cutting into the backlog of cattle, but given the significant reductions in April, it will take months to get caught up, there may be some additional uncertainty through the entire complex as wholesale beef values continue to erode. Cash cattle activity remains sluggish early Thursday morning, following light trade each of the last two days. This underlying weakness in the market continues to add uncertainty through the entire complex with wide price ranges once again this week. There continues to be some question as to how much more trade will develop through the week as overall totals seem to already be relatively strong. Unless major fallout is seen in futures trade, cash markets are expected to continue in the same wide trading range as seen earlier in the week. Open interest added 1,805 positions (261,977). June contracts lost 1,565 positions (31,371) and August contracts added 2,533 positions (108,202). DTN projected slaughter for Thursday is 114,000 head.

FEEDER CATTLE:

Open: Mixed. Initial support seen early Thursday was quickly dashed as limited pressure is moving into the market. Most nearby contracts are holding losses of 15 cents per cwt, as concerns of moderate pressure seen in most markets and active losses in hog trade is creating cattle traders to become much more cautious. Cash index for 5/26 is $126.11, down 0.74. Open interest Wednesday fell 119 positions (28,961).

LEAN HOGS:

Open: $2 to $3 Lower. Strong pressure is seen in lean hog futures trade as concerns of tensions with China could further derail previous trade agreements and cause even more friction between the two countries. This would have a significant impact on overall pork movements through the end of the year as well as summer months as the industry tries to work out of the current backlog of hogs mounting at farms. Sharp triple-digit losses will likely continue to be seen through the morning, but buyers seem unwilling to get close to the market at this point. Cash hog trade is called $1 lower to $1 higher. Most bids are steady to 50 cents lower. Open interest fell 2,295 positions (214,639). June fell 1,432 positions (22,928) and July slipped 1,237 positions (65,491). Cash lean index for 5/26 is $62.53, up 0.23. DTN projected slaughter for Thursday is 422,000 head. Saturday runs are expected at 318,000 head.

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

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