DTN Before The Bell Livestock

GENERAL COMMENTS:

Narrow trading ranges are seen early Tuesday morning, with markets holding a generally stable pattern due to limited long-term direction or market intensity through the entire complex. This could add additional market stability through the day as traders expect little significant impact to develop over the next few hours. Corn futures are trading lower in mixed trade. Stock markets are higher in limited morning trade. Dow Jones is 241 points lower with NASDAQ up 21 points.

LIVE CATTLE:

Open: Mixed. Prices early Tuesday are separated by nearby and deferred market ranges with light to moderate buyer support slowly but steadily stepping into nearby summer and fall contracts months. Deferred futures that consist of 2021 contracts are trading 5 to 25 cents lower with limited volume keeping price moves narrow Tuesday morning. Without any significant outside market shifts, it is likely that trade volume will remain light and keep prices within a narrow to moderate range through most of the morning. At this point traders are not starting to trade potential outcomes of the cattle on feed report that will be released Friday, but this is starting to creep into market expectations and could quickly change market direction based on report estimates, which will be released through the week. Cash activity remains sluggish Tuesday morning with bids hard to pin down at this point. Some asking prices are starting to trickle into the market with cattle priced at $100 per cwt live in the South and $162 dressed in the north. This could limit early week trade volume as both sides are expected to focus on the direction of futures and wholesale beef trade as the week continues. Although the trend has shifted toward daily trade through the week, with the upcoming cattle on feed Friday afternoon, some trade may hold out until after the report. Open interest added 2,592 positions (276,798). August contracts lost 4,571 positions (50,221) and October contracts added 3,716 positions (115,918). DTN projected slaughter for Tuesday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Although early feeder cattle trade is mostly higher Tuesday morning, the inability to spark active support given the focus on firmness seen last week in the futures market and expected trade activity in cash feeder cattle sales is creating some underlying uncertainty through the entire complex. Softness in corn trade early in the week is also adding to the focus on expected production costs through the end of the year. This could help to stimulate additional follow-through support as the week continues, but prices seem to be establishing a new trading range with last week's highs currently setting resistance levels. Cash index for 7/16 is $136.61, up 1.26. Open interest Monday fell 1,063 positions (40,508).

LEAN HOGS:

Open: Mixed. Light to moderate buying slowly stepped back into nearby contracts with August futures leading the price bounce with gains of 40 to 50 cents per cwt. This helps to secure price levels above $50 per cwt and helps to keep prices well above support levels. But the concern about follow-through buying and the ability to move prices out of the current range still is limiting active buyer support. Single-digit losses are holding in deferred contracts, as traders look for longer term direction as the market focuses on the supply and demand balance over the coming year. Cash hog bids are expected 50 cents lower to $1 per cwt higher with most bids steady to firm. Open interest added 1,156 positions (219,055). August fell 3,097 positions (44,253) and October added 2,188 positions (88,767). Cash lean index for 7/17 is $47.90, up 0.35. DTN projected slaughter for Tuesday is 475,000 head. Saturday runs are expected at 226,000 head.

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

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