DTN Before The Bell Livestock

GENERAL COMMENTS:

Cattle futures are mixed in a narrow trading range as the focus on early August market activity is limiting widespread market shifts. The narrow market moves in both live cattle and feeder cattle futures are likely to continue through most of the morning with limited interest likely to develop from either side. Hog futures are shifting lower as additional concerns of demand pressure surrounding increased tensions with China as well as uncertainty about domestic buying in the coming months. Corn futures are trading higher in mixed trade. Stock markets are higher in limited morning trade. Dow Jones is 122 points higher with NASDAQ up 110 points.

LIVE CATTLE:

Open: Mixed. Narrow gains have moved into nearby live cattle futures Monday morning, helping to confirm the market firmness which developed last week. The ability to hold recent gains is expected to spark some follow through buyer support across the complex, although at to this point, limited widespread open interest gains have been seen. This could limit the upside market potential through early August, although recent technical support is pointing to further gains in the October and December contacts. Limited single-digit pressure is seen in deferred contracts as traders take opportunities to adjust positions following the strong rally at the end of July. Cash cattle interest and activity is expected to be held to a minimum through most of the morning Monday. Show list distribution and inventory taking will be the main agenda through the day, although the focus on early month direction in the futures trade may play a larger role in interest and trade activity in cash cattle markets during the first part of the week. Open interest added 1,788 positions (284,503). August contracts lost 1,089 positions (31,282) and October contracts added 634 positions (124,508). DTN projected slaughter for Monday is 119,000 head.

FEEDER CATTLE:

Open: Mixed. Trade volume remains slow to develop Monday morning with initial trade focusing on a combination of follow through buying and early month position covering. With Monday being the first day of August, and nearby contracts setting short term highs Friday, the focus on price adjustments is enticing some market shifts. This is still expected to keep price moves narrow with current trade hovering from 20 cents lower to 25 cents higher. There will be increased focus on the direction of grain trade during early August as well as the ability to confirm higher prices in live cattle futures over the next couple of days. Any firm support through the rest of the cattle complex is likely to add stability to nearby feeder cattle trade. Cash index for 7/30 is $138.58, down 0.67. Open interest Friday added 935 positions (43,975).

LEAN HOGS:

Open: Steady to 90 cents Lower. Firm follow through pressure in nearby lean hog futures trade is causing some additional concerns through the entire complex. October futures remains the most active trading contract, putting increased focus on price levels unable to move above $50 per cwt following late July pressure. Even though prices remain at these lower levels, markets are hovering above short-term support, and the downside market potential remains limited due to the previous market pressure. Cash hog bids are expected 50 cents lower to $1 per cwt higher with most bids steady. Open interest added 2,146 positions (232,815). August fell 1,968 positions (24,483) and October added 2,734 positions (105,379). Cash lean index for 7/30 is $53.52, up 0.94. DTN projected slaughter for Monday is 425,000 head.

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

(c) Copyright 2020 DTN, LLC. All rights reserved.