DTN Before The Bell Livestock

LIVE CATTLE:

Open: 37 cents lower. August cattle are down 75 cents early Thursday, staying in their corrective pattern and contained by resistance near $98, the site of the 100-day average. The good news for cattle is that slaughter levels are almost back to normal, but bearish concerns remain about heavy cattle supplies that backed up while meat plants were limited by coronavirus concerns. USDA estimated Wednesday's cattle slaughter at 120,000, down just 2,000 from a year ago. It will still take time for heavy, backed-up cattle inventory to work through the system. Earlier Thursday, USDA said last week's export sales of beef totaled 20,100 metric tons (mt), similar to a week ago and helped by leading buyers South Korea and Japan. Dow Jones' pre-report survey expects USDA to show 2.5% fewer placements than a year ago and on-feed inventory to be down 1% in Friday's on-feed report. Light cash trade has developed this week near $102 for live cattle and $160 to $162 for dressed trade -- both lower than last week. Wednesday's boxed beef trade saw choice prices drop to $217.93, back to within roughly $10 of where they were before coronavirus shook up the market. Selects finished at $208.08, down $11 since Friday. Total open interest was up 1,021 at 273,024 on Wednesday's slightly higher trade. June contracts were down 1,025 to 6,433 and August was up 869 at 131,115.

FEEDER CATTLE:

Open: 17 cents higher. August feeder cattle are down 45 cents early Thursday after a light attempt to open higher. Like cattle, feeders are trading in a narrow range that has held mostly sideways since early May with concerns that plenty of supplies are available after this spring's bottleneck. Technically, the April 6 low near $110 in August feeders remains an important site for support and it is impressive that current prices are staying well above the low. Even so, feeder prices may continue to drift for a while. The Feeder Cash index for June 16 is listed at $128.41, down $1.29 from a week ago. Total open interest was up 112 at 33,109 on Wednesday's higher trade. August contracts were up 71 at 17,267.

LEAN HOGS:

Open: 7 cents higher. August hogs are down 52 cents early Thursday after a feeble attempt to trade higher on the open. USDA's weekly export sales report showed an impressive 38,600 mt of pork sold last week with Mexico in as the top buyer and China second, taking 10,000 mt. December hogs are down 67 cents, but remain over $4 above their April low as traders continue to anticipate a smaller hog inventory down the road. Speaking of which, USDA's hogs and pigs report is set for June 25 and will hold a lot of interest as the first report in the aftermath of coronavirus-related herd destruction. USDA estimated Wednesday's hog slaughter at 460,000, down from 479,000 a year ago and finding it difficult to close the gap. Pork cutouts increased to $65.47 on 462.51 loads Wednesday, down $4.52 since Friday. Wednesday's packer margin was estimated at $71.10 per head, enough to keep packers interested in buying hogs where processing capacity is available. The Lean Hog Index for June 16 was posted at $47.37 down $3.81 from a week ago and roughly $2 below the July futures contract. Total open interest was down 3,790 at 216,101 on Wednesday's mixed trade. Open interest in the July contract was down 2,717 at 27,950 while August contracts were up 3,572 at 86,430.

Todd Hultman can be reached at Todd.Hultman@dtn.com

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