DTN Before The Bell Livestock

LIVE CATTLE:

Open: 15 cents lower. August cattle are down 20 cents early Friday, holding roughly steady after posting a new four-month high Thursday. After a week of heat advisories in the southern U.S. Plains, much of the Midwest is expecting hot temperatures Friday and into the weekend. There are still plenty of concerns about backed up cattle and heavier weights, but last week's firmer negotiated prices suggested more active demand coming through to help ease some of the bearish pressure. USDA estimated Thursday's cattle slaughter at 117,000, down from 122,000 a year ago and with ongoing labor problems reported at Greeley, Colorado. Cash trade has taken shape this week mostly near $95 for live cattle in the South and largely around $157 to $160 in the North. Thursday's boxed beef trade saw choice prices at $200.80, down $3.70 from last Friday and back below pre-coronavirus levels and low enough to entice movement. Selects finished at $191.30, down $2.99 since Friday. Total open interest was up 4,111 at 271,645 on Thursday's higher trade. August contracts were down 3,240 at 57,906 and October was up 4,165 at 109,656.

FEEDER CATTLE:

Open: 15 cents lower. August feeder cattle are down 85 cents early Friday, taking a break after posting a new four-month high on Thursday. As with live cattle, heat is a recent factor, but there are larger concerns about plenty of feeders being available and pastures are dry in the South. Next Friday, USDA will provide an interesting update of June cattle placements. In spite of bearish concerns, demand for feeders appears to have firmed at the moment and is pulling prices higher. The Feeder Cash index for July 15 is listed at $135.68, up $1.99 from a week ago. Total open interest was up 3 at 41,297 on Thursday's higher trade. August contracts were down 711 at 11,416. From a technical viewpoint, Thursday's new four-month high in August feeders is bullish and the next major resistance is at $156.50.

LEAN HOGS:

Open: 45 cents lower. August hogs are down 52 cents early Friday, but are still up roughly $3.00 on the week with signs of bottoming evident after starting with an extremely difficult and bearish market environment in 2020. USDA estimated Thursday's hog slaughter at 468,000, down from 472,000 a year ago. Slaughter levels have come a long way since April, but it will still take time to get slaughter back above year-ago levels as it was before coronavirus put the brakes on production. Pork cutouts were at $67.35 on 399.07 loads Thursday, down $1.60 from last Friday. Thursday's packer margin was estimated by Dow Jones at $70.50 per head, plenty of incentive for packers to keep buying where processing capacity is available. The Lean Hog Index for July 15 was posted at $47.49, up $2.31 from last week and roughly $6.00 below the August futures contract. Negotiated trade was reported at $31.36 Thursday, still well below formula prices and a sign of chronic surplus in the hog herd. Total open interest was up 3,576 at 228,338 on Thursday's higher trade. Open interest in the August contract was down 260 at 50,763 while October contracts were up 2,272 at 85,611.

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

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